June 14, 2011 / 6:36 PM / in 6 years

UPDATE 2-Chrysler IPO easiest option today -Fiat CEO

* CEO says not in talks to buy VEBA’s Chrysler stake

* Not interested in Opel

* Committed to Tata joint venture (Recasts first sentence, adds CEO comments on Opel and Tata, adds Freemont data)

By Stefano Rebaudo and Ian Simpson

MONTEROTONDO DI GAVI, Italy, June 14 (Reuters) - A public share offering for Chrysler would be easier than having Fiat FIA.MI buy a bigger stake in the No. 3 U.S. automaker, the CEO of both Fiat and Chrysler said on Tuesday.

Sergio Marchionne also said Fiat hoped to talk to Tata Motors about its joint venture in India and said he had no interest in buying General Motors Co’s GM.N Opel brand.

Marchionne said earlier this month that an IPO for Chrysler was more likely to happen next year than in late 2011. [ID:nN03166016] [ID:nLDE7551DG]

“I think the IPO is the easiest option,” Marchionne said on Tuesday at an event marking the launch of Fiat’s production of the Freemont mid-sized sports utility vehicle.

“We cannot put the Fiat rating at risk (for Chrysler),” he said.

The Italian carmaker is poised to increase its stake in Chrysler to 52 percent, raising speculation that Fiat may be aiming to take full control of Chrysler.

Marchionne also said he was not in talks with VEBA union trust fund to buy its stake in the Detroit-based carmaker.

Fiat has an option to buy 40 percent of the VEBA stake starting in June 2012. VEBA owns 45.7 percent of Chrysler.

Fiat has also agreed to pay $75 million for the right to buy all of VEBA’s stake for a capped “threshold amount.” [ID:nLDE7551DG]

The VEBA fund is looking at various options to cash in on its holding, including selling to an investor which could be Fiat or selling in a public share offering, sources familiar with its strategy told Reuters last month. [ID:nN03140098]

Marchionne also said no time frame had been set to buy the Canadian government’s 1.7 percent stake in Chrysler, for which Fiat has offered $125 million.

“It’s very difficult to tell. It’s not my decision. The offer has been made,” Marchionne said.

NO OPEL INTEREST

Marchionne said the group was not interested in GM’s Opel unit.

“The time has passed. I think we found our way with Chrysler,” Marchionne said, adding that taking on Opel would be too complicated.

German media reported last week that GM was considering putting Opel up for sale. Fiat had looked at buying Opel in 2009 before pulling out of the race for Chrysler.

Fiat remains committed to its joint venture with India’s Tata Motors. TAMO.BO TAMO.NS

“I think we have to do a lot more work our end,” Marchionne said, adding he hoped to meet the Tata head before the end of the summer to discuss the joint venture.

Asked about sales of the Fiat 500 small car in the United States, Marchionne said he expected to meet sales targets despite a shortage in distribution.

He said Fiat had only about 70 dealers set up to sell the car, short of a launch target of 160. The number likely will rise to 100 by the end of the summer.

“We’re short of getting distribution,” he said. “I think overall we’ll hit the numbers. I think turnover will be fine.”

The Freemont, key to Marchionne’s plan to cut development costs and boost factories’ capacity use, is the first example of a car under the Fiat-Chrysler tie-up to be revamped for another market.

Fiat is targeting sales of 30,000 in Europe this year. Andrea Formica, head of sales, said the group had received more than 6,000 orders for the new Crossover Freemont in the last two weeks. (Reporting by Ian Simpson and Stefano Rebaudo, additional reporting by Deepa Seetharaman in Detroit, writing by Antonella Ciancio and Stephen Jewkes; editing by Matthew Lewis) Writing by Antonella Ciancio, Stephen Jewkes and Matthew Lewis)

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