Originally published at www.seclive.com
Chrysler Group LLC filed for an initial public offering Monday, after talks between Fiat and the United Auto Workers union failed. Fiat, which owns 58.5% of Chrysler, wants to own the remaining 41.5% of the company but Fiat and the UAW cannot agree on a sales price. UAW asserts its stake is valued at $5B but Fiat is offering more than $1B less than the desired price. Hoping an impending IPO will move the process forward, Fiat CEO Sergio Marchionne is gambling that the IPO will price low in a move to force UAW's hand. However Marchionne is also risking the possibility it could price higher to a level advantageous to UAW, which would corner him to pay the higher price. Filing for an IPO does not exactly mean the offering will happen, but rather will be used to better determine pricing for continued negotiations.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.