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Thursday, 23 September 2010 17:29

Marchionne Targets Chrysler IPO in Q2 of 2011

Chrysler Group LLC will probably hold an initial public offering in the second half of 2011 as investors approved Fiat SpA’s plan to spin off its industrial business September 16 according to reports made by Bloomberg News.

“I don’t think it’s the first part; I think it’s a second part of the year event,” Sergio Marchionne, chief executive officer of both carmakers, told reporters in Turin today when asked when in 2011 a Chrysler share sale would take place.

Fiat, which acquired a 20 percent stake in Chrysler in June last year, September 16 announced the approval by shareholders to separate CNH Global NV, Iveco and some industrial and marine operations into a new company called Fiat Industrial SpA, leaving Fiat Auto and luxury brands Ferrari and Maserati in the new Fiat SpA.

The separation would allow Marchionne, 58, to focus on carmaking and would give Fiat an entity to facilitate future alliances.

The spinoff, the most sweeping corporate reorganization in Fiat’s 111-year history, will resolve an issue that’s been a “thorn in the side” for Italy’s largest carmaker, Marchionne told shareholders today.

Fiat Industrial, which will start trading in Milan next January, may be valued at 8.38 euros a share, according to the average projection of five analysts surveyed by Bloomberg News. That’s 49 percent more than the 5.64 euro value estimated by the analysts for the new Fiat SpA, which will include auto-making operations and the Ferrari and Maserati luxury brands.

“Fiat Industrial is undervalued by investors and will benefit from a recovery of the capital goods market,” said Gabriele Gambarova of Banca Akros SpA, who is ranked No. 1 among Fiat analysts tracked by Bloomberg and based on relative returns of the stocks they covered in the past year. “Investors will be more cautious on Fiat auto, which will have to invest to complete its commercial offer.”

Before September, Fiat had risen 34 percent since the Chrysler deal and was down 1.6 percent since the spinoff announcement on April 21. Fiat auto may double its trading profit to 1.2 billion euros, according to the business plan presented in April.

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