Chrysler CEO Marchionne: We'll Take a Piecemeal Approach to IPO in 2011
Marchionne, who is also CEO of Italy's Fiat, is one year into a five-year plan to rebuild Chrysler, the smallest of Detroit's Big Three automakers. Fiat holds a 20% stake in the Auburn Hills, Mich.-based company, which emerged from bankruptcy a little more than year ago.
The majority of Chrysler stock, 67.7%, is held by a United Auto Workers trust established to help cover retired auto workers with their health care costs. The U.S. and Canadian governments hold 12.3% of Chrysler shares, a much smaller stake than the 61% the U.S. Department of the Treasury holds in General Motors, which also emerged from bankruptcy in 2009.
A Plan Much Like GM's
"One of the options is to do an initial public offering that would involve a relatively small issue," Marchionne said. At a point six to nine months later, a larger offering could be done that would allow the UAW trust to sell its shares, Bloomberg said.
"The primary objective of the IPO is to provide financial, long-term stability to Chrysler," Marchionne said, so selling stock in "chunks" would likely be more effective.
Marchionne's plan mirrors that of General Motors, which recently said its IPO would likely be smaller than first planned and won't result in the federal government's 61% equity stake in the automaker being sold off in "one fell swoop."
GM expects to raise $8 billion to $10 billion when its IPO hits Wall Street in November, according to recent reports. That's well below the $16 billion that the deal was previously expected to rake in when it was first announced in August.
Marchionne said Chrysler would seek to raise, "by far," less than $8 billion, Bloomberg said.
Chrysler is expected to sell about 5% fewer vehicles in September than it did last month, but more than 50% more units than it did in September 2009, according to estimates by Edmunds.com.
Chrysler along with the rest of the industry will report September sales on Friday, Oct. 1. The bulk of those reports are expected to be lackluster, based on forecasts, because of the languishing economic recovery.