Turin

Chrysler IPO may delay merger with Fiat

Will update 2013 targets at end of October says Marchionne

Chrysler IPO may delay merger with Fiat

(By Denis Greenan). Turin, September 13 - Chrysler's planned initial public offering could delay its merger with parent Fiat, the CEO of both companies, Sergio Marchionne, said Friday. "It could do," Marchionne answered a journalist. The Chrysler IPO is possible by the end of 2013 but "more likely" in the first quarter of 2014, Marchionne said. Chrysler's IPO is set to take place in New York. Chrysler's minority shareholder, a union-affiliated healthcare trust, VEBA, decided in January to sell part of its Chrysler stake in a public offering. Fiat owns 58.5% of Chrysler and wants to buy VEBA's remaining stake. Marchionne said he did not believe their positions on the buyout were getting closer. He said talks were "ongoing" and scoffed at reports VEBA wanted $5 billion, saying "it should buy a lottery ticket". Marchionne added that new Alfa Romeo models were in the pipeline after Fiat's one-billion-euro investment in Turin's long-stagnant and former flagship Mirafiori plant to produce Maserati SUVs. "We'll announce them at the right time," he said. Fiat will issue an update on its and US unit Chrysler's 2013 targets at the end of October, Marchionne said. He said there were "positive and negative signs". The outlook for the auto sector next year is not good in Europe or in Italy, he said. "I do not see a huge improvement for the European car market next year. "I have not changed my mind on the car market". In July the Turin and Detroit carmaker confirmed targets for 2013. Turnover should come in between 88 and 92 billion euros; trading profit at 4 to 4.5 billion euros; net profits between 1.2 and 1.5 billion euros; and net industrial debt around 7 billion euros, it said. Fiat Chairman John Elkann on Friday said the one-billion-euro revamp of Mirafiori "confirms our commitment to Turin". Fiat reached a deal with unions on Mirafiori on September 4. Marchionne said at the time the agreement made it possible to "immediately start the investment plan necessary to guarantee the production and employment future of the Mirafiori plant". He said it was a "brave" decision that confirmed Fiat's "commitment" to its Italian operations. The deal came after a long period of tension in which Fiat threatened that it could drop its commitments to investing in Italian plants due to problems in its industrial relations here. In July Marchionne blasted business in Italy saying, "conditions in industrial Italy remain impossible" and threatened to move production of new models of Alfa Romeo vehicles abroad. Fiat has been engaged in a long tussle with the left-wing FIOM union over its drive to introduce more flexible working practices in Italy to make the plants profitable. But after the Mirafiori deal the head of the UIL union, Luigi Angeletti, said Marchionne had guaranteed that investments would be made. Marchionne told union representatives that workers at Mirafiori would be temporarily laid off in October and put on CIG benefits while production lines are made ready for it to produce a Maserati SUV model. Ferdinando Uliano of the FIM union said the carmaker also planned to produce another model at Mirafiori in addition to the Maserati SUV, while stressing that the company had not said when this would happen. The FIM-CISL secretary for Turin, Claudio Chiarle, said that, after investments at the city's Grugliasco plant that now makes the Maserati Quattroporte and Ghibli models, "It is (now) Mirafiori's turn, thus completing Fiat's industrial strategy of focusing on high end and luxury brands to give full employment and high profit margins. "It is a fundamental step for the workers of Mirafiori and Fiat's suppliers in Turin after years of CIG benefits, sacrifices, and economic suffering, which have prevented many Turin families from building a future, but who today can see new, concrete prospects," Chiarle added. FIM Secretary General Giuseppe Farina, meanwhile, said Marchionne has also confirmed Fiat would maintain its commitments to invest in other Italian factories.

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