Chrysler’s decision to file for an IPO made Fiat CEO Sergio Marchionne reconsider its alliance with the US automaker.
Fiat, which currently own 58.5% of the US automaker, is willing to pay VEBA, the UAW trust fund,$3 billion for the rest of Chrysler, a price not even close to the $5 billion requested by the trust. VEBA took advantage of its right earned during the US automaker’s 2009 bailout, that of going forward with an IPO, increasing pressure on Fiat’s CEO Sergio Marchionne.
“Fiat is saying that Chrysler is worth less if we don’t get that full integration,” said Richard Hilgert, an analyst with investment research firm Morningstar. “It’s a shot across the bow of the UAW.”
Analysts consider the IPO as VEBA’s move to try to get more money from Fiat and many believe that the initial public offering will never take place. Fiat responded angrily to Chrysler’s move spurring doubts about the Italian automaker’s plans to merge with the US car maker. If merged Fiat-Chrysler would become the seventh largest auto group in the world and this alliance was the center point of the 2009 Obama administration restructuring plans for the US auto industry.
“Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us,” Chrysler said in its S-1 filing with the U.S. Securities and Exchange Commission.
The Italian automaker said that it is also reconsidering whether it will continue to share vehicle platforms, engineering expertise, technology and other resources with the US automaker.