Chrysler Group took the first steps toward an IPO (initial public offering) of stock on Monday by making a government filing.
In the document, the group explained that the number of shares to be sold and the price range have yet to be established.
All of the shares involved in public trading would come from a United Auto Workers retirement trust , which owns a 41.5 percent of Chrysler, reports USA Today .
The remaining 58.5 percent of the company is owned by Fiat , which has been in control of the company since a government-sponsored reorganization in 2009.
The trust explained that it wanted to cash out its share of the stock to pay health benefits for about 60,000 people it covers. The filing explained: “We do not intend to pay any dividends in the foreseeable future.”
It could take several months for the Securities and Exchange Commission to approve Chrysler’s IPO request. Should the sale of shares happen, it would be the first time since 1998 that all three Detroit-based automakers are publicly traded.
The IPO filing could force Fiat’s hand. Reuters notes that the automaker wants to take full control of Chrysler and buy out the stock owned by the UAW.
However, the UAW Trust hasn’t been satisfied with Fiat’s refusal to purchase its stock for $5 billion. Bankers and analysts think the IPO filing is less of a decision to sell stock on the market and more a way to force Fiat’s hand.
Fiat’s reaction to the filing was one of anger, suggesting that the two companies could have trouble merging. In the S-1 filing, Chrysler stated, “Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us.”
The IPO could be a negotiating tool, should Fiat decide it wants a full stake in Chrysler badly enough. The filing may pressure Fiat to accept the UAW’s offered price.
