Chrysler IPO Coming Up as Fiat Counts on Merger

by Jon LeSage, remar­ket­ing edi­tor for Auto­mo­tive Digest

It’s a crit­i­cal time for the Fiat and Chrysler merg­er as the Chrysler IPO should be com­ing up soon.…

Ser­gio Mar­chionne, chief exec­u­tive of Fiat and Chrysler, is count­ing on a merg­er of the two com­pa­nies as Fiat’s finan­cial per­for­mance gets hit.

Fiat’s third quar­ter prof­its were hurt by slump­ing sales in South Amer­i­ca and con­tin­ued hard­ship in Europe, but Chrysler had strong results.

Chrysler saw net income rise 22% to $464M on a 13.5% rise in rev­enue. Fiat’s per­for­mance under­shot prof­it esti­mates for the quar­ter and cut its 2013 fore­cast by 16%.

Europe is see­ing its worst car slump in two decades. Brazil is a big over­seas mar­ket for Fiat, where the automak­er saw rev­enue fall 17% and prof­it more than halved.

Mar­chionne would like to see the two com­pa­nies merge to bet­ter com­pete with glob­al majors GM and Volk­swa­gen.

His efforts have been under­cut by union health­care trust Veba, which owns 40.5% of Chrysler not held by Fiat; Veba has demand­ed that some of its hold­ings be list­ed on the stock mar­ket.

Mar­chionne is hav­ing to drum up sup­port for an ini­tial pub­lic offer­ing he’d rather avoid. He has said it will take place before the end of this year.

In doc­u­ments filed for the IPO, Fiat warned Chrysler that the IPO meant the Ital­ian automak­er is recon­sid­er­ing terms for tech­nol­o­gy and design shar­ing, which could threat­en poten­tial syn­er­gies need­ed in the merg­er.

Mar­chionne has been cred­it­ed for cre­at­ing a part­ner­ship and inte­gra­tion between Fiat and Chrysler, avoid­ing the mess that hap­pened not long ago with Daim­ler not treat­ing Chrysler as an equal part­ner.

An exam­ple of this could be his appoint­ment of Detroit-based Saad Chehab from run­ning the Chrysler and Lan­cia brands to also being named glob­al mar­ket­ing chief of Maserati. That’s an impor­tant new posi­tion for Fiat, which expects the Ital­ian lux­u­ry brand Maserati to pro­duce major sales and prof­it growth over the next few years.

Finan­cial Times

Detroit Free Press



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