Fiat May Boost Chrysler Stake to More Than 50% Before IPO

January 6, 2011 at 2:38 pm

Fiat SpA, the Italian carmaker that owns 20 percent of Chrysler Group LLC, may boost the holding to more than 50 percent before the U.S. automaker’s initial public offering, the two companies’ chief executive officer said.

“I think it is possible. I don’t know whether it is likely, but it is possible that we’ll go over the 50 percent mark if Chrysler decides to go to the markets in 2011,” Sergio Marchionne, 58, told reporters at the Milan stock exchange today. “It will be advantageous if that happens.”

Fiat received the stake as part of Auburn Hills, Michigan- based Chrysler’s 2009 bankruptcy reorganization. It expects to get an additional 15 percent this year when Chrysler makes a small engine in the U.S. and meets sales objectives outside of North America. Fiat has an option to increase the holding to 51 percent, buying an additional 16 percent, after Chrysler repays U.S. and Canadian government loans.

“It looks cheaper for Fiat to get 51 percent of Chrysler before the IPO,” said Philippe Houchois, a London-based analyst at UBS AG, who estimates that Fiat could save $1 billion to $2.7 billion if it exercises the option before a Chrysler listing. “It’s a positive scenario for Fiat shares.” Read More

Source: T. Ebhardt, Bloomberg, January 3, 2011

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