Fiat (FIATY) has agreed to pay $4.35B to acquire the 41.5% stake in Chrysler owned by the United Auto Workers Retiree Medical Benefits Trust.
The deal ends a long-running dispute over the valuation of Chrysler - which is just over $10B under the agreement - and helps pave the way for the consolidation of the companies into a single global automaker with combined sales of 6M vehicles and 2012 revenue of €84B.
The transaction also means that Chrysler's prospective IPO will probably be called off. (PR)
Automobile sales are forecast to have grown nicely in November from October's shutdown-influenced pace, according to the latest rash of industry predictions.
Estimates for November range from a Seasonally Adjusted Annual Rate of 15.7M (Edmunds.com) to 16.1M (JD Power) - up from October's 15.154M SAAR.
What to watch: Ford (F), General Motors (GM), and Chrysler (FIATY) are expected to have picked up market share during the month while Honda (HMC), Hyundai (HYMLF), and Volkswagen (VLKAY) are tapped to retreat a bit. The calendar kicks in an extra selling day which automakers won't highlight greatly. Inventory numbers and average transaction prices will be closely watched. If the former decreases and the latter improves, automobile stocks could rally.
Chrysler is reportedly considering setting the price range of its IPO so that it would raise $1.5-2B, which would give the auto maker a market cap of $9-12B.
Such a range would value the 41.5% stake held by the United Auto Workers' retiree healthcare trust at $3.7-5B.
Chrysler expects to fix the range this week and carry out the listing by mid-December in order to avoid the holiday slowdown in the IPO market.
Alternatively, the external setting of a valuation for the trust's stake could facilitate a deal for Fiat (FIATY) - Chrysler's majority owner - to buy the UAW holding and stop the IPO. Fiat would then be able to merge its operations with Chrysler. (Previously)