Chrysler IPO to bring shareholder battle to a head

Reuters

* Chrysler IPO documents to be filed this month - Marchionne

* Minority shareholder VEBA would sell some shares in IPO

* Follows deadlock in talks for Fiat to buy VEBA's stake

By Francesca Landini and Deepa Seetharaman

MILAN/DETROIT, Sept 16 (Reuters) - Chrysler Group LLC plansto file documents this month that would allow its minorityinvestor to sell shares in a stock market listing, a processthat will slow Italian carmaker's Fiat SpA's plans totake full control of the U.S. automaker.

An initial public offering would bring to a head the ongoingbattle between Sergio Marchionne, who has led both companiessince Chrysler's government-financed bankruptcy in 2009, and ahealthcare trust fund affiliated with the United Auto Workersunion.

The trust, a type known as a voluntary employees'beneficiary association or VEBA, is unhappy with the price Fiathas offered for its Chrysler stake. Now, the VEBA is exercisingits right to push Marchionne to take Chrysler public.

Marchionne told reporters on Friday that he expects to filethe regulatory documents necessary to take Chrysler public bythe end of the month - a move that he has long resisted. The IPOcould happen during the first quarter of 2014, he added.

Marchionne has repeatedly said he would like to avoid an IPOso Fiat take full ownership of the U.S. automaker. An IPO coulddelay his plans for a full merger of the two companies.

"It's in the interest of both parties, but of Fiat inparticular, to reach an agreement before a Chrysler IPO," saidICBPI analyst Luca Arena.

Fiat owns 58.5 percent of Chrysler and wants to buy the 41.5percent stake held by the UAW trust fund, called the UAW RetireeMedical Benefits Trust, to secure access to cash and technologyit needs to compete against rivals.

The UAW trust hopes to attract a better price from investorsespecially as Chrysler's value continues to rise in the next fewyears as the U.S. auto industry sustains a robust recovery. ButMarchionne hopes the market's valuation of the U.S. carmakerwill convince the VEBA to take Fiat's existing offer.

The VEBA is seeking more than $5 billion for its stake,which it obtained as part of Chrysler's 2009 restructuring,several people familiar with the matter havesaid.

"They should buy a lottery ticket," Marchionne said Fridaywhen asked to comment on the $5 billion figure. UBS analystsestimate the stake is worth about $4 billion.

Fiat shares were down 0.3 percent Monday to 6.13 euros,extending losses on Friday after Marchionne said he was notgetting any closer to striking a deal with VEBA.

The VEBA can sell a stake of up to around 25 percent ofChrysler in a stock market listing. The rest is locked as partof an agreement that allows Fiat to exercise options togradually buy portions of the VEBA holding.

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