Fiat to increase stake in Chrysler to 51% before IPO, no merger between the two planned

Sergio Marchionne

Italian automaker Fiat SpA, which currently owns 20 percent of Chrysler Group, may increase its holding to more than 50 percent before initial public offering by the Auburn Hills automaker, CEO of both companies Sergio Marchionne said today.

“I think it is possible. I don’t know whether it is likely, but it is possible that we’ll go over the 50 percent mark if Chrysler decides to go to the markets in 2011,” Marchionne told reporters at the Milan stock exchange today. “It will be advantageous if that happens.”

Fiat bought a 20 percent stake in Chrysler in 2009 after it came out of bankruptcy. It is expected to increase that percentage point to 15 percent this year. Fiat also has an option to increase its stake to 51 percent, buying an additional 16 percent. But before that can happen, Chrysler will have to repay U.S. and Canadian government loans.

Marchionne also said today that there is currently no plan to merge Fiat and Chrysler.

“A legal merger is not going to change our lives,” he said. He reiterated that a Chrysler IPO could take place in the second half of this year.

– By: Omar Rana

Source: Bloomberg