Fiat Threatening Pullback with Chrysler with IPO

Majority owner Fiat SpA has threatened to pull back from any commitments in the future to Chrysler Group its American carmaker if a new healthcare trust is successful in selling its share in an IPO.

Chrysler in a prepared statement said Fiat had informed them they were reconsidering the costs and benefits of additional expanding of its relationship with them.

This, said the statement, could include its decision on capital allocation and preservation, investments and the locations of facilities for production.

Sergio Marchionne, who operates both carmakers, would face a worst-case scenario if the partnership were realigned. He hopes to use this sale process for investors to weigh in on the value of Chrysler and end the ongoing stalemate that has prevented a full merger.

The warning made to the retiree trust of the United Auto Workers, which owns the 41.5% of the American automaker that Fiat does not, is in the long run meant to prevent the retiree trust from selling its shares in the market and force an agreement to be made with the automaker in Italy on price.

Marchionne has offered as much as $1 billion less than what the retiree trust has wanted and is relying on investors not being eager to pay the top premium for an IPO that Fiat opposes.

Fiat stock fell very little on the news. The stock has increased over 63% during 2013, valuing the automaker based in Turin at $10.4 billion.

Marchionne has taken most of the last four years attempting to unify both companies and form a global automaker with the ability to compete with giants in the industry like General Motors Co., Volkswagen AG and Toyota Motor Corp.

Buying the stake owned by the trust would give the Italian automaker access to the more than $12 billion Chrysler has in cash to help it fund the company turnaround throughout Europe, where it is losing money and share in the market.

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