UAW trust taps Deutsche Bank to advise on Chrysler exit: sources

Wed Sep 25, 2013 7:53pm EDT
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By Soyoung Kim and Deepa Seetharaman

NEW YORK/DETROIT (Reuters) - Chrysler Group LLC's second-largest shareholder, a union healthcare trust fund, has tapped Deutsche Bank (DBKGn.DE: Quote) for advice on how to exit its 41.5 percent stake in No. 3 U.S. automaker, according to two people familiar with the matter.

The investment bank is advising the trust fund, which is affiliated with the United Auto Workers union, in the midst of intensifying and heated talks with main owner Italian automaker Fiat SpA FIA.MI over the stake's value.

The trust fund is weighing the benefits of a gradual sale of its stake through an initial public offering against an outright sale to Fiat, the people said on Wednesday, asking not to be identified because of the confidential nature of the matter.

Fiat, which owns 58.5 percent of Chrysler, wants to buy out the UAW trust and gain full control of the company. But the trust's asking price of more than $5 billion is far more than Chief Executive Sergio Marchionne is willing to pay.

The feud came to a head on Monday when the trust, known as the VEBA, forced Chrysler to file IPO paperwork. The VEBA won the right to do this under the terms of Chrysler's 2009 government-backed bankruptcy restructuring.

The IPO process would put Marchionne, who has run both automakers since 2009, in the awkward spot of having to sell potential investors on a stock offering he has sought to avoid.

He has publicly said an IPO would undermine his plans to merge the two companies and create the world's seventh-largest auto group. Monday's filing now steps up pressure on Marchionne to seal a deal with the VEBA and avoid going public.

The VEBA, which pays medical benefits for blue-collar auto retirees, did not immediately respond to requests for comment. Brock Fiduciary, which has managed the trust's holdings in Chrysler since 2010, and Deutsche Bank declined to comment.   Continued...

Chrysler Group Chairman and CEO Sergio Marchionne addresses the audience during a news conference at the Chrysler Mack I Engine Plant to announce a major financial investment and more jobs added to the engine plant in Detroit, Michigan in this file photo from November 15, 2012. REUTERS/Rebecca Cook/Files