Fiat's Marchionne, VEBA no closer to deal on Chrysler buyout
Chrysler moving ahead on IPO as talks on buying VEBA's 41.5% stake in automaker falter
Fiat and Chrysler CEO Sergio Marchionne says he is no closer to a deal to take full ownership of Chrysler, which in the meantime is moving ahead on the formalities for an initial public offering.
Marchionne told reporters in Turin, Fiat's headquarters, that talks were continuing with the United Autoworkers health care trust, VEBA, on buying their 41.5 per cent stake in Chrysler, but the two sides continue to disagree on price.
Fiat already owns 58.5 per cent of Chrysler but wants to buy the rest of the company so it can better compete against industry giants like GM and Toyota.
VEBA obtained its stake in the company as part of the 2009 bailout of Chrysler by U.S. taxpayers. The Reuters news agency reported that under the terms of that deal, Chrysler paid $75 million US for the right to buy all of VEBA's stake for a capped "threshold amount" — which was set at $4.25 billion in 2009 but has accrued to about $5 billion, growing at a compound annual interest rate of nine per cent.
"Veba wants $5 billion? They should buy a lottery ticket," Marchionne was quoted as saying by the Italian news agency LaPresse.
VEBA wants to get the most it can for its stake and has the option of selling the full stake or using an IPO to sell off part of it.
The trust has asked Fiat to begin working on an IPO of Chrysler but cannot formally compel it to follow through.
Marchionne said a Chrysler IPO would be technically ready by the end of the year.
Fiat shares fell 2.8 per cent to 6.06 euros ($8.06 US) after Marchionne made his remarks Friday. The stock had rallied earlier in the week on speculation that Marchionne absence from the Frankfurt auto show meant that he was closing in on the Chrysler deal, but on Friday, the CEO told reporters he didnt attend because he simply had work to do.
With files from Reuters