Fiat’s share price has spiked on speculation that a deal to consolidate its control and ownership of Chrysler could be close.
The Wall Street Journal reported at the weekend that Fiat is talking to banks to secure financing to buyout VEBA, the United Auto Workers’ retirees’ healthcare trust, which currently owns 41.5% of Chrysler.
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Chief executive Sergio Marchionne wants to merge the two carmakers to create the world’s seventh-largest auto group, tapping Chrysler’s cash flow to offset Fiat’s losses in Europe and building economies of scale.
Fiat and VEBA have been negotiating the value of the VEBA stake and a possible IPO for the merged entity.
Marchionne has, in the past, voiced eagerness to do a deal with VEBA as soon as possible. He may have concluded that market conditions in the US are right at the moment to secure an attractive price on any public offering.
