Published September 24, 2013
Chrysler on Tuesday reluctantly filed for an IPO of up to $100 million, forced by its second-largest shareholder.
The move comes after majority shareholder Fiat refused to buy a United Auto Workers trust fund's remaining 41.5% stake in the automaker for more than $5 billion.
With no deal, the trust, which covers the health-care expenses for roughly 130,000 Chrysler retirees, is now exercising its right under Chrysler’s 2009 government-financed bankruptcy to sell its shares on the public market.
According to the securities filing, Fiat and Chrysler Chief Executive Sergio Marchionne strongly objected to the IPO which could delay or even prevent his plans to merge both companies and create the seventh-largest automaker in the world.
But while the IPO filing was seen as a way to pressure Marchionne to reach a deal, Chrysler said in the filing, “Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us and the terms on which Fiat would continue the sharing of technology, vehicle architectures and platforms, distribution networks, production facilities and engineering and management resources.''
Chrysler also emphasized that both sides could still reach a deal without those shares ever being sold publicly. Still, the offering will be underwritten by J.P. Morgan (JPM) and if it does go through is expected to launch in the first quarter of 2014.