Marchionne Gambling by Putting Chrysler on the Stock Market

FiatFiatItaly, 1899 > present159 models
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CEO Sergio Marchionne’s decision to file paperwork for an initial public offering for ChryslerChryslerUnited States of America, 1925 > present70 models
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on the American stock exchange is seen as a huge gamble in his attempt to buy Chrysler from VEBA, the medical pension for the United Auto Workers labor union. If the paperwork is filed in the next few days, then Chrysler could be on the stock exchange by the first quarter of 2014.

The IPO decision stems from the Delaware court decision at the end of July that decided that the price Fiat was offering VEBA for Chrysler stock was too low, but that VEBA’s desired price for the stock was too higher. Negotiations between the two sides have fallen apart with the prices that the two sides want reportedly being $1 billion different.

Marchionne and VEBA have an agreement to sell the company for about $6 billion, which is more than he wants to pay. If the IPO is successful, then he can pay the $6 billion for the company, regardless of the stock price. If the IPO does not go that high, then Marchionne can buy it for less. He has said that he wants to pay less than $5 billion ideally.

"I will work my buns off to get the best possible reception in the equity market, but there's a limit to my talents," said Marchionne.

Source: Automotive News