Analysis: Fiat chief's dealmaking record at stake with Chrysler offering

Tue Sep 24, 2013 3:28pm EDT
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By Jennifer Clark and Laurence Frost

MILAN/PARIS (Reuters) - Fiat FIA.MI boss Sergio Marchionne's decision to push ahead with a Chrysler IPO he does not want has raised the stakes in a buyout dispute with the U.S. carmaker's minority shareholder - as well as for his own legacy.

It may be one of the consummate dealmaker's biggest bluffs yet, bankers and analysts said on Tuesday.

Chrysler, 58.5 percent-owned by Italy's Fiat, filed paperwork late on Monday in a step towards the flotation of shares held by the United Auto Workers, which owns the rest of Chrysler through its retirees' healthcare trust.

Group CEO Marchionne is proceeding with the initial public offering demanded by the union, after the two sides failed to agree on a buyout deal in more than a year of talks.

Fiat needs full Chrysler ownership to fund an ambitious recovery and expansion program with the U.S. carmaker's cash.

But the Chrysler filing raised eyebrows by informing potential investors that Fiat was "reconsidering" the entire tie-up and warned that the group may be harmed by a share sale.

Fiat would also be free to sell Chrysler following a flotation, the 390-page document says.

"Fiat's talk about scaling back the alliance with Chrysler is simply that, just talk," said an analyst with a Milan brokerage.   Continued...

Fiat Chief Executive Sergio Marchionne poses during a visit at the carmaker's Sevelsud plant in Atessa, central Italy, July 9, 2013. REUTERS/Remo Casilli