Chrysler CEO says IPO won’t come before next year
Friday, June 3, 2011
TOLEDO, Ohio (AP) — Fiat’s purchase of the U.S. government’s ownership stake in Chrysler Group LLC resolves one thorny political issue. Another lies ahead: Where to base the combined company.
Work already is under way to merge the two into one automaker. Fiat SpA is Italy’s largest employer and a source of national pride, but it would be problematic for Chrysler to relocate to a foreign country after being saved by U.S. taxpayers.
“It’s a difficult call,” said Sergio Marchionne, CEO of both companies. “Access to financing is probably the most important criteria.”
Marchionne addressed the company’s future Friday after President Barack Obama toured a Chrysler’s assembly plant that makes the Jeep Wrangler. Obama came to the plant in the politically important state of Ohio to celebrate the resurgence of the U.S. auto industry and Chrysler’s announcement that it’s repaying its government loans ahead of schedule.
“What you’ve done vindicated my faith,” Obama told a group of auto workers. “Today all three automakers are turning a profit.”
Marchionne also said he’s not planning to take the automaker public until at least next year. He thinks Chrysler needs more time to prove itself. The automaker earned $116 million from January through March, its first quarterly profit since 2006.
“My gut suggests no earlier than 2012,” he said.
He earlier had hinted that an IPO could happen by the end of this year.
Chrysler said last week it will cut ties with the U.S. government within the next three months when Fiat buys the U.S. Treasury’s 6 percent interest in Chrysler for $500 million. The deal will give Fiat a majority 52 percent stake in the automaker, just two years after it agreed to manage Chrysler after its bankruptcy.
He’s currently talking with Canadian officials about buying that country’s 1.7 percent ownership in Chrysler. He said they aren’t “going to get a better deal than I offered treasury.”
Marchionne said he was pleased the automaker kept its word to pay off the U.S. money it borrowed two years ago. “It shows we respect our commitments,” he said.
Removing the government hand in ownership should help end the hard feelings generated by the bailout, he said. Some consumers vowed to stop buying Chrysler and GM models because of the government’s involvement.
“My hope is it does, but I’m not counting on it moving market share,” Marchionne said.
He wouldn’t say when a decision would be made on the new company’s location.
“It’s really going to be driven by where we get the means to realize capital,” he said. “We’ve had a very good experience here in the U.S. ... (while) Europe has gone a long way in creating an efficient capital market.”
He does expect to announce by the end of the year how he’ll merge Fiat and Chrysler. But he wouldn’t hint at possible names.
Marchionne said he was irked Friday while seeing signs around the plant with the DaimlerChrysler name, the German automaker that owned the company for a decade.
“Before we start talking about combining names, let’s get rid of the old one,” he said.
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