Chrysler Group Forced into Filing for Initial Public Offering by Second-Largest Shareholder
Chrysler Group Forced into Filing for Initial Public Offering by Second-Largest Shareholder (Reuters)
Chrysler Group LLC was forced into taking the first step toward an initial public offering (IPO) – which may never take place — by its second-largest shareholder, the United Autoworkers trust. The trust is seeking to exchange its shares in Chrysler for cash to fund medical benefits for blue-collar retirees. Analysts speculate the filing could turn out to be a negotiating strategy by the trust and that the IPO would never even hit the market. Instead, current shareholders would simply see their price per share appreciate and then have the option of taking those paper gains to the bank in the future. The UAW trust is able to force the IPO filing under the rights it received through Chrysler’s 2009 government-financed bankruptcy. The intent seems to be to boost pressure on Sergio Marchionne, chief executive of both automakers, to reach a deal with the trust on a sweetened purchase price of the trust’s stake in Chrysler. Chrysler’s largest shareholder, Fiat, owns approximately 58.5 percent but wants to acquire a 100 percent stake in Chrysler down the road. The trust is trying to speed up that timing and boost its ultimate payout.