Chrysler won't go ahead with IPO in 2013 -Fiat

Reuters - UK Focus

* Fiat (Frankfurt: 860007 - news) says expects Chrysler (Xetra: 710000 - news) to work on IPO for Q1 2014

* Fiat says uncertain if and when IPO will happen

* IPO delay prolongs uncertainty over potential Fiat-VEBAdeal

By Agnieszka Flak

MILAN, Nov 25 (Reuters) - The planned stock market listingof Fiat's U.S. unit Chrysler will not take place thisyear, the Italian carmaker said on Monday, prolonging theuncertainty over its chances of buying out the rest of thecompany.

The initial public offering was expected to help settle along-running spat over the U.S. automaker's value between Fiatand a retiree healthcare trust tied to the United Auto Workersunion, which owns 41.5 percent of Chrysler.

The delay represented yet another obstacle to ChiefExecutive Officer Sergio Marchionne's plan for the Fiat-Chrysleralliance, one of the centerpieces of the Obama administration's2009 restructuring of the U.S. auto industry.

Chrysler's board of directors "determined that it will notbe practicable for Chrysler Group to launch and complete aninitial public offering prior to the end of 2013," Fiat said ina statement.

The company said it expected Chrysler to work toward an IPOin the first quarter of 2014, but added it could not say if andwhen such an offer would happen as it would depend on "marketconditions and other relevant considerations."

In a regulatory filing late Monday, Chrysler said itintended to list its shares on the New York Stock Exchange underthe symbol "CGC (Shenzhen: 000902.SZ - news) ." The company also added five otherunderwriters, including Bank of America Merrill Lynch,which with JPMorgan Chase & Co (NYSE: JPM - news) , will lead the IPO.

The additional bookrunners are Barclays Plc (Other OTC: BCLYF - news) ,Goldman Sachs Group (Munich: 920332 - news) , Morgan Stanley (Xetra: DWD.DE - news) and UBS AG (Xetra: UB0BL6 - news) .

Marchionne, who has run both Chrysler and Fiat since 2009,was looking to kick off its IPO road show in early December, butthat was pushed back after a U.S. tax issue emerged, two sourcessaid.

Fiat assumed management control and a stake in Chryslerafter the U.S. automaker emerged from a government-fundedbankruptcy restructuring. Fiat has since increased its stake inChrysler to 58.5 percent.

The Chrysler IPO process is already highly unusual becauseMarchionne has publicly said an IPO would undermine his plans tomerge the two companies. But his inability to secure a deal withthe UAW trust fund made an IPO impossible to avoid.

This feud between Chrysler's two shareholders came to a headin late September when the UAW trust exercised a right enshrinedin Chrysler's 2009 bankruptcy documents to force the U.S.automaker to file IPO paperwork.

Investors had hoped that the preliminary work for the IPO ofpart of the VEBA stake might have helped narrow the differencebetween the two sides, and that they could reach a deal withoutcarrying out the share sale.

"Nobody really believes there will be an IPO, but any delayin the IPO process means there will be a delay in the twoparties striking a deal," a Milan-based analyst said. "The stockis reacting on the uncertainty."

Fiat shares ended the day down 3.5 percent, compared with a0.2 percent fall in Milan's blue-chip index.

According to the Wall Street Journal, Chrysler expects toraise between $1.5 billion and $2 billion in the IPO. Based onthe 16.6 percent stake that the trust has demanded the companyregister for the IPO, this would imply a total value for theU.S. firm of between $9 billion and $12 billion.

Fiat declined to comment on the report, while Chrysler didnot respond to requests for comment. Some analysts have said thecompany is worth around $10 billion.

Marchionne, the CEO of Fiat and Chrysler, wants to merge thetwo firms to create the world's seventh-largest carmaker.

The UAW became Chrysler's second-largest shareholder whenthe automaker emerged from bankruptcy in 2009 and the union tooka stake in place of future healthcare payments. VEBA managesthose healthcare benefits on behalf of the union.

Chrysler, which Fiat has been running since a bailout dealwith the U.S. government, is now a profit centre for Fiat.

The Italian carmaker has been hurt by sagging sales forautomobiles in Europe, while Chrysler's home North Americanmarket has seen sales rise nearly 50 percent since 2009.

The Chrysler buyout talks are being closely watched by debtand equity investors, because Fiat's long-term plan to cutlosses in Europe depends on its ability to easily and cheaplyshare technology, cash and dealer networks with Chrysler.

Chrysler and Fiat currently are forced to manage theirfinances separately. A full merger would make it easier - butnot automatic - to combine the cash pools of the two companies,giving Fiat more funds to expand its product lineup.

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