The minority owner of Chrysler Group LLC on Wednesday pushed the US automaker to take the first step toward becoming a public company again by demanding that Chrysler register shares with US regulators.
The minority owner, a United Auto Workers union retiree healthcare trust, on Wednesday demanded that Chrysler register 16.6 percent of company shares with the US Securities and Exchange Commission. The trust has the right to make the demand because of the 2009 agreement that brought Chrysler out of bankruptcy and left Fiat SpA as part-owner.
But analysts say that there will not be an initial public offering. They say that the healthcare trust is forcing Fiat's hand in valuing Chrysler shares now being contested in a Delaware court.
The bankruptcy agreement allows Fiat to buy as much as 3.3 percent of Chrysler every six months, until it reaches a maximum of 16.6 percent of Chrysler purchased in this fashion.
Sergio Marchionne, chief executive of both Fiat and Chrysler, has said he wants to merge the two companies by 2015.
The fact that the healthcare trust, a voluntary employee beneficiary association (VEBA), wants Chrysler to register the same amount of shares that would be affected by the court's ruling on their valuation is no coincidence, analysts said.
"The IPO ain't gonna happen," said Richard Hilgert, an analyst at Morningstar. "VEBA wants to get a pricing on the 16.6 percent so that they can take it to court and say 'this is the market price.'"
The Italian automaker now owns 58.5 percent of Chrysler and the VEBA owns 41.5 percent.
The notional value of Chrysler shares has risen sharply since it was a company standing on shaky ground in 2009 to one that is the profit center for Fiat, which is struggling due to a weak European auto market.
Based on filings with the court, Fiat values all of Chrysler at $4.2 billion, and the VEBA values it at $10.3 billion. Hilgert valued Chrysler's equity at $13.6 billion in a report published by Morningstar in May. He thinks Fiat stock is undervalued.
In November, a UBS report valued Chrysler at $9 billion.
London-based UBS analyst Philippe Houcho is also said there would not be an IPO and that the move by the VEBA is a ploy in the separate battle over the value of Chrysler shares.
"Fiat is trying to buy Chrysler on the cheap," said Houchois.
He said the only pressure VEBA can put on Fiat is to list the shares