Fiat SpA may boost its stake in Chrysler Group LLC to more than 51 percent before an initial public offering of the U.S. automaker, as it seeks to buy the shares for less money.
“It’s possible” that Fiat will buy more Chrysler stock, Sergio Marchionne, chief executive officer of both companies, told reporters today in Turin, where the Italian carmaker is based. “The more we wait, the more it costs” to buy shares from the U.S. Treasury, he said.
Fiat boosted its holding in Chrysler to 46 percent yesterday after the U.S. carmaker repaid $7.6 billion in U.S. and Canadian government loans, reported Bloomberg. The CEO, wearing a “paid” pin on his trademark navy blue sweater, said Fiat will consolidate Chrysler results from June 1. Fiat expects to get an additional 5 percent stake in the fourth quarter, in return for developing a fuel-efficient car for Auburn Hills, Michigan-based Chrysler.
Fiat rose as much as 24 cents, or 3.4 percent, to 7.14 euros and traded at 7.11 euros, up 3 percent, at 11:55 a.m. in Milan, valuing the company at 8.7 billion euros ($12 billion).
“Marchionne is playing fast in the integration with Chrysler, and this is also good news for the shares,” said Wolfram Mrowetz, chairman of Alisei SIM in Milan, who oversees 200 million euros in assets including Fiat shares. “Marchionne is great at managing the financial aspects, now he has to also concentrate on products and regaining market share in Europe.”
A merger of Fiat and Chrysler is planned to reduce costs and improve integration, though there is no set timing and a combination isn’t likely this year, Marchionne said. The CEO is preparing to sell Chrysler shares to the public later this year or in 2012, depending upon market conditions and cash needs.
Fiat has options to increase its Chrysler holding to more than 70 percent, the U.S. company said this month in a filing with the U.S. Securities and Exchange Commission. Those options include the right to buy the Treasury’s remaining stake in the 12 months after government loans are repaid.
The U.S. government now owns 6.6 percent of Chrysler, Canadian authorities own 1.7 percent and a retiree health-care trust managed by the United Auto Workers union holds 45.7 percent, Eileen Wunderlich, a Chrysler spokeswoman, said in an e-mail.
Fiat also has an option to acquire 40 percent of the original stake held by the UAW trust, Chrysler said. The option is exercisable from July 1, 2012, to Dec. 31, 2016, and in amounts of as much as 8 percent in any six-month period, according to the filing.
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