James R. Healey, USA TODAY
Chrysler Group filed for an initial public offering of stock.
If the Securities and Exchange Commission approves and the sale of shares takes place, it would be the first time since 1998 that all three Detroit automakers are publicly traded. Chrysler was bought by Germany's Daimler-Benz in 1998, then sold to private investment group Cerberus Capital.
Fiat now owns 58.5% of Chrysler and wanted to buy the remaining stake, held by the United Auto Workers Retiree Medical Benefits Trust, and fully merge Chrysler and Fiat. Fiat and the UAW trust negotiated for months, but couldn't agree what Fiat should pay for the trust's 41.5% stake.
The two sides haven't disclosed the specifics, although the trust is thought to want $5 billion or more.
The trust has to retain a significant portion of its Chrysler stake, keeping a pool available for Fiat to buy over time, under an previous agreement.
Fiat sued the UAW trust in Delaware Chancery Court, but a judge declined to set a price, saying that should be settled in a trial. It could be 2015 before such a trial began -- longer than Fiat's timetable for taking over all of Chrysler.
In filling the documents with the Securities and Exchange Commission, Chrysler is following the path of General Motors, which conducted an IPO Nov. 17, 2010, pricing its common shares at $33 and raising $20.1 billion.
It took more than two years for the shares to begin routinely trading for more than that.
Before the GM IPO, taxpayers owned about 61% of GM because the U.S. Treasury pumped money into the failing car company to preserve jobs and the U.S. manufacturing base. After the IPO, the taxpayers' share dropped to roughly 30%, and has been shrinking since then as the government sold portions of its holding over time.
The two automakers' situations are different, though they arise from the same circumstance. Both were forced into government-scripted Chapter 11 bankruptcy reorganizations in 2009.
In GM's case, the government put billion of dollars into GM. In Chrysler's case, Fiat got a 20% stake in Chrysler and control of the company in return for Fiat's promise to develop fuel-efficient small cars for Chrysler and build them in the U.S., as well as to open its global distribution network to Chrysler.
Fiat was allowed to buy additional stakes as it hit various triggers in its agreement with the government, and Fiat/Chrysler CEO Sergio Marchionne had hoped to accumulate all Chrysler shares.
When Fiat took its initial stake in Chrysler, the European auto market had not yet tumbled as the U.S. market had. Now, the U.S. market is rebounding strongly and Fiat depends on Chrysler profits, a reversal of fortunes.
Had Marchionne been able to merge the two automakers into a single entity, money could flow freely between the two, helping support whichever entity is worse off, albeit at the expense of the other.