Fiat offers $125 million for Canada’s Chrysler stake: CEO
Chrysler IPO may not be needed if deal with VEBA reached
By Giancarlo Navach, ReutersJune 4, 2011
The U.S. Treasury has agreed to sell its six per cent stake in Chrysler Group LLC to Fiat SpA for $500 million, allowing it to exit its investment in the Detroit automaker after its bailout in 2009.
VENICE – Fiat has offered $125 million to buy the Canadian government’s stake in Chrysler Group LLC as it moves swiftly to strengthen its control of the U.S. automaker, Fiat SpA CEO Sergio Marchionne said on Saturday.
News of the offer comes just two days after the U.S. Treasury agreed to sell Fiat its remaining six-per-cent equity stake in Chrysler for $500 million, raising Fiat’s holding in Chrysler to 52 per cent.
The Canadian government has a 1.7-per-cent holding in the U.S. No. 3 automaker, which has been managed by Fiat under a 2009 bailout that gave the Italian group 20 per cent of Chrysler and the possibility to gradually increase its stake under certain conditions.
“We presented an offer last Thursday for the Canadian government stake,” Marchionne, who is also the CEO of Chrysler, told reporters in Venice on the sidelines of a conference.
Marchionne added that should Fiat reach a deal with VEBA – the United Auto Workers’ health-care trust – over the fund’s 45.7-per-cent stake in Chrysler, a Chrysler IPO may “no longer be necessary.”
Fiat, which already has an option on 40 per cent of VEBA’s shares, is paying $75 million for the U.S. Treasury’s option to buy all Chrysler shares held by VEBA.
“We purchased that right (to buy the shares held by VEBA) to make sure no one else would sit at the table,” said the Italian-Canadian manager, who has made Fiat one of Europe’s top turnaround stories.
“All options are open. The objective is to monetize Veba’s position, so we need to find a way to give them the money,” he said.
Marchionne had said on Friday an IPO of Chrysler, which would allow the VEBA to cash out of its position in the company, was more likely in 2012 than this year.
VEBA is in no rush to sell and is looking to get the best possible return, two sources familiar with the matter said on Friday.
NO HQ MOVE FROM ITALY
Marchionne, who has in the past raised the prospect of an IPO of luxury sports brand Ferrari, reiterated this was a possibility, but added: “Right now we don’t need money.”
Asked about a rebound in Italy’s new car sales in May – the first rise after 13 straight monthly declines – he said: “Technically speaking it’s a reversal of the trend but the market is what it is, it is not healthy.”
Marchionne also said he had no intention of moving Fiat’s headquarters from Turin to the United States, a sensitive issue in Italy where Fiat is the biggest industrial group.