Fiat says don't expect a Chrysler IPO this year, it's not "practicable."
Italian carmaker Fiat said on Monday a planned initial public offering of its U.S. unit Chrysler will not take place this year, prolonging the uncertainty over whether it can reach a deal to buy the stake in the group it does not already own.
The IPO, which Fiat CEO Sergio Marchionne had previously said could take place in 2013, was expected to shed light on the U.S. carmaker's value and help settle a long-running spat between Fiat and a healthcare trust which owns 41.5 percent of Chrysler.
"The Board of Directors of Chrysler Group ... has determined that it will not be practicable for Chrysler Group to launch and complete an initial public offering prior to the end of 2013," Fiat said in a statement.
It said it expected Chrysler to work towards an IPO in the first quarter of 2014, but added it could not say if and when such an offer would happen as it would depend on "market conditions and other relevant considerations".
Fiat, which has a 58.5 percent stake in Chrysler, wants to buy the rest of the U.S. carmaker, but has not been able to agree a price with the United Auto Workers union, which owns the rest via its retirees' healthcare trust VEBA.
Investors had hoped that the preliminary work for the IPO of part of the VEBA stake might have helped narrow the difference between the two sides, and that they could reach a deal without carrying out the share sale.
Fiat shares fell as much as 2 percent after the statement, with traders saying the fact that the IPO was being delayed indicated a deal with VEBA was not around the corner.
Chrysler filed paperwork for an IPO in late September.
Chrysler, which Fiat has been running since a bailout deal with the U.S. government four years ago, is now a profit centre for Fiat.
The Italian carmaker has been hurt by sagging sales for automobiles in Europe while Chrysler's home North American market has seen sales rise nearly 50 percent since 2009.
First published November 25 2013, 7:24 AM