Fiat chairman says Chrysler IPO would split companies

A Fiat board member has expressed concern that Chrysler’s planned Initial Public Offering could split the automakers into two separate companies. Fiat has been planning to fully merge with Chrysler since becoming a shareholder in 2009.

“If the IPO will take place, there will be two companies, and that’s different than having a single one,” Fiat chairman John Elkann told Bloomberg.

He added that “there is no doubt” that a Chrysler IPO will alter Fiat’s relationship with the Auburn Hills-based automaker.

Chrysler’s IPO would give the UAW’s retiree health fund the opportunity to sells its shares in the automaker on the open market. The fund, known as VEBA, holds a 41.5 percent stake in Chrysler. Fiat owns the balance.

Fiat has spent the last several months negotiating with the UAW over the value of its outstanding shares. Chrysler’s IPO could force Fiat’s hand in paying the UAW’s asking price for its ownership stake.

If Fiat fails to secure VEBA’s shares before the IPO, the company could lose access to Chrysler’s $12 billion cash reserve. 

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