If the final value for the American carmaker remains around the level currently being discussed by banks, Fiat SpA is set to gain the upper hand in negotiations to buy a health-care trust’s holding in Chrysler Group LLC.
Bank advisers are considering a valuation of about $10 billion for Chrysler, people with knowledge of the matter said. That would make the 41.5 percent of Chrysler owned by the United Auto Workers trust worth $4.15 billion, less than what analysts have expected Fiat to pay.
The trust and Fiat – Chrysler’s majority shareholder – are disputing the company’s value as Sergio Marchionne, CEO of both carmakers, seeks to buy the UAW’s stake. The trust is working to determine whether to sell its holding to Fiat directly or press forward with an initial public offering as soon as next month, said the people, who asked not to be identified because the information is private.
“It’s going in Marchionne’s direction,” said Sascha Gommel, a Frankfurt-based analyst at Commerzbank. “It’s in the interest of both parties to avoid an IPO. In the end, the most likely scenario is that Fiat takes the remaining stake.”
Investment banks working on the IPO have considered a range from $9 billion to $16 billion, said one of the people. The advisers are currently focusing on a range of about $10 billion to $11 billion for the IPO, said another person. Talks are fluid and the final number could change.
Fiat gained as much as 14 cents, or 2.3 %, to 6.01 euros and was up 0.7 % as of 11:45 a.m. in Milan trading today. The stock has climbed 56 % this year, valuing the Italian automaker at 7.4 billion euros ($10 billion).