In a filing that Chrysler Group’s majority owner wanted to delay forever, the U.S. carmaker has submitted its Form S-1 to the U.S. Securities and Exchange Commission to raise $100 million in an initial public offering (IPO). Fiat SpA owns a 58.5% stake in Chrysler and wanted to acquire the rest of the company from the United Auto Workers pension fund, which owns the remaining 41.5%. The pension fund apparently will wait no longer.
The United Auto Workers Retiree Medical Benefits Trust is a voluntary employees’ beneficiary association, or VEBA, that has been pressing Fiat to hold an IPO for some time, believing that the trust’s stake will fetch a higher price on the open market than it will in a direct sale to Fiat. The number of shares included in the IPO is not specified in the filing. All will come from the pension fund, and all the proceeds will go the pension fund, not to the company.
The VEBA has demanded an IPO of 16.6% of Chrysler’s shares, but that would bring far more than the $100 million total included in today’s filing. When Fiat exercised a call option on part of the VEBA’s stake earlier this year, the proposed price valued Chrysler at around $6 billion. UBS analysts valued the U.S. automaker at around $9 billion.
Our guess is that Fiat went ahead with the filing under protest and that it will do everything it can to delay or avoid going through with the IPO at all. We will not know until the roadshow begins, but if Chrysler’s valuation is anywhere near Fiat’s valuation, the Italian company could make the trust fund an offer it would be foolish to refuse.