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The Next Big U.S. IPO? It May Be Chrysler

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Fiat, Italy’s biggest manufacturer, is reportedly considering buying the 41.5% of Chrysler that it doesn’t already own, then taking the combined company public in a new IPO.

According to a The Wall Street Journal article citing “people familiar with the matter,” Fiat CEO Sergio Marchionne has wanted to combine the two companies since Fiat bought Chrysler in 2009 following a U.S.-government bailout. Since then, Chrysler has returned to profitability and provided parent company Fiat with much-needed cash. Chrysler accounted for 75% of Fiat’s 2012 operating profit.

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“Hats off to Chrysler and Jeep in particular,” says The Daily Ticker’s Henry Blodget. “People love Jeep. It’s such a success story.”

Jeep led U.S. Chrysler sales for years but they fell in March, reportedly due to a restructuring of the brand. Chrysler is ending the Jeep Liberty and relaunching the Grand Cherokee. Fiat sales have also been doing well, especially the Fiat 500 — a mini car — whose sales are on track to soon reach 100,000.

The Daily Ticker’s Aaron Task credits Fiat’s CEO with the success of the company.

“Sergio Marchionne came into Fiat when it was on its knees," says Task. "They took over part of Chrysler when it had one foot in the grave and he’s turned them both around. It’s a tribute to leadership, and leadership matters.”

Related: Bailouts of GM, Chrysler Were Good for Ford Too: Alan Mulally

And Marchionne's leadership will be tested once again. Fiat has to negotiate with the UAW, whose retirement health-care plan owns the remaining stake of Chrysler that Fiat wants. The UAW claims its shares are worth about $4.6 billion. Fiat doesn’t agree. A Delaware Chancery Court is scheduled to hold a hearing on the matter Thursday, but a decision is not expected for at least a month or two. Marchionne is also well aware of the failed merger (dissolved in 2007) between Chrysler and Daimler-Benz.

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