Sep. 24 - The UAW trust fund pushed Chrysler for an IPO to pressure Fiat to offer a premium for its shares say analysts. Fred Katayama reports.
TV AND WEB RESTRICTIONS ~**NONE*~ Chrysler's move to pursue an IPO isn't something its biggest owner, Fiat, is celebrating. That's because Fiat wants to privately buy Chrysler's remaining shares at a much lower price than the $5 billion sought by the second largest owner, the UAW trust fund. Analysts say the fund, which is advised by Paris-bred investment banker Alain Lebec, filed for an IPO to pressure Fiat's CEO, Sergio Marchionne, to up the ante. What strengthens Lebec's position is that Chrysler has strongly bounced back into the black from the financial crisis with new products like the refreshed Jeep Grand Cherokee, so it's now stronger than its parent. That, some analysts say, has raised Chrysler's valuation to around $10 billion. Marchionne wants to tap into Chrysler's cash to help fund product development at Fiat, which has been hit hard by Europe's slow growth. And he wants to merge the two companies to create the world's seventh largest auto group. Analysts say Fiat's investors are betting that the IPO won't take place because the Italian automaker can't afford to walk away. Fiat's stock, which is down more than 20 percent from its peak two years ago, was flat on the news. The union trust calls for taking 16 percent of the company's shares public. It plans to use the proceeds to pay for retiree medical benefits. The stakes are high in this tug of war. Chrysler says in its prospectus that Fiat could wind up reconsidering the terms of sharing technology and platforms.