Will Chrysler go public again?
It might under a plan for Fiat to buy the shares it doesn't already own. But will the UAW sell?
But maybe it will become a public company again. That is, if a plan under consideration by Sergio Marchionne, CEO of Fiat (FIATY) and Chrysler comes to fruition. And if the United Auto Workers' health care trust agrees to sell its stake.
Fiat, Italy's largest automaker, has owned 58.5% of Chrysler since January 2012. It acquired control of the company in 2011 as part of the process of bringing the No. 3 U.S. automaker out of a 2009 bankruptcy.
Since then, the question for Marchionne has been how to get the rest.
Under a plan now under consideration, Fiat would buy the 41.5% of Chrysler that's owned by the UAW health care trust, The Wall Street Journal reported Wednesday. Then it would sell at least a share of Chrysler to the public in an initial public offering in the U.S. It's not clear whether Fiat and Chrysler would be combined into one corporate entity or whether Fiat would continue to be listed in Europe, The Journal said.
Owning 100% of Chrysler would give Marchionne access to Chrysler's cash. The company is now profitable and has a decent cash flow.
An IPO for a combined company would strengthen its balance sheet. That would be good for Chrysler but even better for Fiat, whose European business is getting clobbered by Europe's nonstop economic woes.
The European operations of any automaker are getting clobbered. Sales in many European nations are down 10% or more. French sales in March were down 16.4% from a year ago and 14.7% for the first quarter. German sales were down 13% for the quarter.
General Motors (GM) is shuttering an Opel plant in Germany, laying off 3,000 workers. Ford Motor (F) is shutting a plant in Belgium, and 4,300 workers will lose their jobs. France's Peugeot (PEUGY) will cut 10,000 jobs and close a major plant near Paris. Last year, Business Insider noted, it sold its headquarters to trim debt.
Which brings us to the UAW health care trust. The trust was created to let Chrysler, Ford and GM shed their obligation to pay lifetime health benefits. Chrysler has bought back stakes owned by the U.S. and Canadian governments.
Chrysler and the union have been fighting in court over how to value the trust's stake. The trust said it has a duty to maximize the value of its Chrysler stake to cover rising health care costs for the automaker's retirees. The plan may need a bit of TLC to come together.
Is going public a good thing? Well, you get to open trading at the exchange where your stock is listed. But it also puts your business under extreme scrutiny, and Wall Street can be harsh.
GM went public again at $33 in November 2010, and the shares dropped to as low as $18.75 last summer. They are now at $30.55.
Ford didn't go into bankruptcy and thus didn't need an IPO. Its shares bottomed at $1.26 in November 2008, then climbed up to $18.79 in early 2011. They're at $13.28 now.
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Marchionne,Fiat and Chrysler; Can stick that up their azzes....What a scam.
Along with the "Vulture Capitalist" too....
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