Tag Archive | "Sergio Marchionne"

Fiat Boosts Chrysler Stake to Majority


Fiat SpA took a majority stake in Chrysler Group LLC when it completed the purchase of a 6 percent stake from the U.S. Treasury and a 1.5 percent holding from Canada that ended taxpayer ownership in the automaker.

Fiat, which paid $625 million for the holdings, increased its stake in Chrysler to 53.5 percent on a fully diluted basis, Chrysler said in a U.S. regulatory filing. Fiat also paid $75 million for governments’ right to buy the remaining stake held by the United Auto Workers union’s retiree health-care trust, of which $15 million goes to Canada, reported Bloomberg.

“With today’s closing, the U.S. government has exited its investment in Chrysler at least six years earlier than expected,” Timothy Massad, the Treasury Department’s acting assistant secretary for financial stability, said in a separate statement. Loans to Chrysler were set to mature in 2017.

Fiat consolidated Chrysler’s results from June 1, a sign of the rapid integration of the two carmakers since the Auburn Hills, Michigan-based manufacturer exited bankruptcy in June 2009. Fiat is scheduled to report its second-quarter earnings July 26, the first one to include Chrysler results.

Fiat, based in Turin, Italy, and Chrysler will have a single management structure soon, Sergio Marchionne, chief executive officer of both companies, said last week.

Marchionne, 59, is working on management changes as he moves to integrate the two companies. He plans to merge the carmakers to reduce costs and achieve a target of more than 100 billion euros ($140 billion) in combined revenue by 2014. The executive said in May that the timing of a merger hasn’t been decided, adding that a combination isn’t likely this year.

“With the business strategies of Fiat and Chrysler irrevocably linked, we believe a merger is a logical next step,” Stefan Burgstaller. a Goldman Sachs Group Inc. analyst wrote in a note to clients July 20.

Fiat, initially granted a 20 percent stake in Chrysler by the U.S. government, expects to hold 58.5 percent of the third- biggest U.S. automaker by the end of 2011, after getting 5 percent in return for developing a fuel-efficient car for Chrysler. The United Auto Workers union’s trust will have the remaining 41.5 percent of Chrysler at that time.

Posted in Auto Industry NewsComments (0)

Fiat, Chrysler to Have One Management Structure, Sergio Marchionne Says


Fiat SpA and Chrysler Group LLC will have a single management structure soon, Sergio Marchionne, chief executive officer of both companies, said today, as he takes another step toward merging the two carmakers.

Marchionne plans to announce a unified structure “in terms of leadership pretty quickly,” the executive told reporters in Zurich after a speech at the Swiss-American Chamber of Commerce. Marchionne, 59, declined to say whether the announcement would come along with Fiat’s quarterly earnings report July 26, reported Bloomberg.

Marchionne is working on management changes as he steps up the integration of the two companies. He plans to merge the carmakers to reduce costs and achieve a target of more than 100 billion euros ($140 billion) in combined revenue by 2014. The executive said in May that the timing of a merger hasn’t been decided yet, adding that a combination isn’t likely this year.

“No one is better than Marchionne at selling an auto story,” Societe Generale analyst Stephen Reitman wrote in a note to clients July 11. “The current stock price already discounts most of the good news to come from Chrysler and ignores much of the risk,” said Reitman, who cut his recommendation to “sell” from “buy.”

Fiat consolidated Chrysler’s results starting at the end of May, a sign of the rapid integration of the two carmakers since the Auburn Hills, Michigan-based manufacturer exited bankruptcy in June 2009.

Fiat, which was initially granted a 20 percent stake in Chrysler by the U.S. government, aims to hold 57 percent of the third-biggest U.S. automaker by the end of 2011. The United Auto Workers union’s trust will have 41.5 percent of Chrysler at that time, Fiat said.

Posted in Auto Industry NewsComments (0)

Fiat Won’t Risk Credit Rating Cut to Buy Chrysler Stake, Marchionne Says


Fiat SpA Chief Executive Officer Sergio Marchionne said the Italian carmaker won’t risk a credit- rating downgrade to gain full ownership of Chrysler Group LLC.

“We can’t jeopardize the rating of Fiat,” Marchionne told reporters late yesterday in Gavi, Italy, at a presentation of the Freemont sport-utility vehicle. “The easiest route” is an initial public offering at Chrysler instead of an outright purchase of the stake Fiat doesn’t currently own, reported Bloomberg.

Fiat was placed under review for a possible downgrade by Moody’s Investor Services and Fitch Ratings in April after the carmaker announced plans to raise its Chrysler stake. Standard & Poor’s lowered its long-term corporate credit rating on the carmaker to BB in February and confirmed its “negative outlook.” All Fiat’s ratings are below investment grade.

The automaker, based in Turin, Italy, last month consolidated Chrysler’s results, a sign of the rapid integration of the two since the Auburn Hills, Michigan-based manufacturer exited bankruptcy in June 2009. S&P said in April its “negative outlook” reflected the “very substantial” operating and financial risks related to increased Chrysler exposure.

A share sale at Chrysler, as opposed to a purchase of the remaining shares, would mean less direct risk exposure for Fiat. Marchionne said yesterday he’s not in talks to acquire the United Auto Workers retiree health-care trust fund’s stake in the U.S. automaker. An IPO of Chrysler isn’t on tap for this year, he added.

“The market is not there” for a share sale, he said in an interview.

Fiat fell as much as 5 cents, or 0.7 percent, to 7.28 euros and was down 0.3 percent to 7.31 euros as of 10:11 a.m. in Milan trading. The shares have gained 9.1 percent this year, valuing the carmaker at 8.94 billion euros ($12.9 billion).

Fiat, which was initially granted a 20 percent stake in Chrysler by the U.S. government, aims to hold 57 percent of the third-biggest U.S. automaker by the end of 2011. The UAW trust will have 41.5 percent of Chrysler at that time, Fiat said.

Fiat agreed June 3 to pay $500 million for the U.S. government’s remaining 6 percent stake in Chrysler, boosting its holding to 52 percent. The CEO expects to receive an additional 5 percent stake in the fourth quarter in return for developing a fuel-efficient car for Chrysler.

Fiat has also made an offer to buy Canada’s 1.5 percent holding in Chrysler for $125 million and has acquired the U.S. government’s rights to buy the shares held by the UAW’s retiree trust, also known as VEBA.

“Marchionne may wait to see how Fiat and Chrysler cash generation develops and then decide whether to buy the VEBA stake or go for an IPO,” said Massimo Vecchio, a Mediobanca Spa analyst in Milan who has an “outperform” rating on Fiat. “Strong cash flow at Fiat and Chrysler are crucial to finance the call options exercise and to enhance company value.”

Marchionne also said that a listing of Ferrari SpA, Fiat’s most profitable unit, isn’t currently on the table, while it’s “always a possibility.”

Fiat has enough liquidity and has “no urgency” to issue new bonds, Marchionne said. The Italian carmaker this week confirmed its financial targets for 2011, including net income of about 300 million euros and its plan to sell 6 million cars with Chrysler by 2014.

Marchionne is pushing Chrysler this year to raise its global sales by 32 percent to 2 million vehicles and turn an annual profit of $200 million to $500 million. Chrysler last month posted a first-quarter net income of $116 million, its first since emerging from bankruptcy in 2009. Global sales during that period increased by 18 percent.

Marchionne said that Fiat isn’t interested in buying General Motors Co.’s Adam Opel unit. German magazines Der Spiegel and Auto Bild reported on June 9 that GM is prepared to sell Opel as losses at the European division persist. Fiat was a suitor for Opel when it was for sale in 2009.

Posted in Auto Industry NewsComments (0)

Chrysler Global Sales Increase of 11 Percent in May Is Below Marchionne’s Target


Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, said global automobile sales in May rose 11 percent from a year earlier, trailing the goal Chief Executive Officer Sergio Marchionne set for 2011.

Global deliveries climbed to 160,144 last month, Auburn Hills, Michigan-based Chrysler said in an e-mail. Worldwide sales this year through May rose 17 percent to 714,403, trailing the 32 percent growth rate Marchionne targeted for this year, reported Bloomberg.

A global economy reeling from Japan’s record earthquake in March and political turmoil in the Middle East may have slowed Chrysler’s growth from its plan at the start of the year, Rebecca Lindland, an analyst with IHS Automotive, said today in an interview.

“Forecasts that were put out at the beginning of the year were really based on an economy that was expected to improve more than it has not only in the U.S. but on a global basis,” said Lindland, who’s based in Lexington, Massachusetts.

Marchionne yesterday named Reid Bigland head of U.S. sales and the Dodge brand. He takes on the new duties in addition to his previous role as head of Chrysler’s Canada operations.

Marchionne is pushing Chrysler to sell 2 million vehicles this year and turn its first annual net profit since emerging from bankruptcy reorganization in 2009.

“I think we’re going to sell 2 million cars this year,” Marchionne told reporters last week while visiting a Chrysler plant in Toledo, Ohio. “That’s what I want to sell.”

While Marchionne said he isn’t sure if the market will strengthen in June, he said industry sales may improve in the following months.

“You can never rule out Marchionne meeting his goals because he manages to pull off magic every day it seems,” Lindland said. “But that’s definitely going to be a challenge. He’s not getting any help from outside influences.”

Sales outside of North America rose 17 percent to 14,566 in May, Ralph Kisiel, a Chrysler spokesman, said in an e-mail yesterday. That’s faster than the 8.7 percent gain in non-North America sales the company posted in April.

Sales in Canada rose 17 percent last month to 24,406 while deliveries in Mexico fell 7.3 percent to 5,809, he said. The company previously reported U.S. sales rose 10 percent to 115,363 in May.

Posted in Auto Industry NewsComments (0)

Fiat Makes Bid for Canada’s Stake in Chrysler


VENICE — Fiat SpA Chief Executive Sergio Marchionne said Saturday the Italian auto maker offered about $125 million to the Canadian government to acquire its 1.7 percent stake in Chrysler Group LLC.

Speaking on the sidelines of an event in Venice, Mr. Marchionne said he made the offer Thursday night. The disclosure came two days after Fiat reached a deal to pay the U.S. Treasury $500 million to buy its remaining 6 percent stake in Chrysler, reported The Wall Street Journal.

Mr. Marchionne, who is chief executive of both Fiat and Chrysler, reiterated that Fiat has the financial ability to buy out the stake held by the United Auto Workers health-care trust fund but at the moment has nothing on the table.

“We acquired the U.S. Treasury stake in Chrysler also to avoid the possibility that a competitor would sit with us at the table in the future,” he added.

A spokesman for Canada’s finance minister said he was unable to comment about Mr. Marchionne’s remarks, adding Canada remains committed to selling its Chrysler stake “as quickly as feasible, while maximizing the value of our equity interests for Canadian taxpayers.”

The U.S., Canada and the health-trust fund were given pieces of Chrysler during the auto maker’s 2009 bankruptcy.

Mr. Marchionne said that the main target is now to pay the health-trust fund, a voluntary employees beneficiary association, or VEBA. “All options are on the table now, the IPO is not necessary,” he said.

Fiat’s top manager said that he plans to add about 100 dealers in the U.S. by the summer to boost sales of the Fiat 500 model. “Americans want to buy fuel-efficient cars,” he said when asked about the possible risk of selling small cars in a country accustomed to larger ones.

Mr. Marchionne said neither a merger between Fiat and Chrysler nor a decision on where to move the company’s headquarters is a priority this year. “The real issue to work on is the leadership and the integration,” he said. “We are going to make little changes in a short while. It’s going to be a busy summer,” he said, adding that the corporate governance of the company must take into account that Chrysler produces as many cars in the U.S. as Fiat does in the world. “Because of the weakness of the European markets in 2011 and 2012, Chrysler will make more cars than Fiat world-wide. This is an interesting dilemma,” he said.

When asked about Fiat-Chrysler expansion plans in Asia and a possible tie-up with Japan’s Suzuki Motor Corp., Mr. Marchionne said that the industrial relationship with the car maker is very good.

“We plan to continue our cooperation with them both on engines and platform developments,” he said, mentioning the new S4 model. He confirmed that he met with Suzuki officials a couple of weeks ago.

He also said that the Italian car maker revised its sale target in Russia to 120,000 vehicles. “We did the revision in light of the changes to the domestic market.”

Mr. Marchionne said that Fiat could issue more bonds in future months while Chrysler won’t. He reiterated that the main target is to make money and generate cash. “Never ever get to the point of reference to the banks,” he said. Mr. Marchionne also said that Fiat would seek capital—if and when necessary—on the financial markets.

Posted in Auto Industry NewsComments (0)

Chrysler’s Marchionne Says IPO of U.S. Automaker Isn’t Likely Before 2012


Chrysler Group LLC, the U.S. automaker controlled by Fiat SpA, needs more time to show strong financial results before holding an initial public offering, the companies’ top executive said.

“We need an additional track record of performance and probably a better equity market than I’m seeing today,” Sergio Marchionne, chief executive officer of both automakers, told reporters today in Toledo, Ohio.

Chrysler needs all of this year before an IPO, and there would be “no benefit” in holding one in 2011, he said.

Marchionne is pushing Chrysler this year to raise its global sales by 32 percent to 2 million vehicles and turn an annual profit of $200 million to $500 million, reported Bloomberg. Chrysler last month posted a first-quarter net profit of $116 million, its first since emerging from bankruptcy in 2009, and global sales during that period increased by 18 percent.

Marchionne’s comments came after President Barack Obama visited the Chrysler plant that builds Jeep Wrangler sport- utility vehicles. The U.S. Treasury and Fiat announced a deal yesterday for the Italian automaker to pay $500 million for the U.S. government’s remaining 6 percent stake in Chrysler.

The Treasury said it will receive an additional $60 million as part of an agreement for Fiat to acquire the government’s rights to buy the United Auto Workers retiree health-care trust fund’s stake in Chrysler. The Canadian government will get $15 million from that part of the transaction, the Treasury said yesterday in a statement.

Buying the U.S. stake will raise Fiat’s holding in Auburn Hills, Michigan-based Chrysler to 52 percent. Marchionne has said he expects to receive an additional 5 percent stake in the fourth quarter in return for developing a fuel-efficient car for Chrysler.

Chrysler wouldn’t need to go forward with an IPO if the trust agreed to sell its stake to Fiat, Marchionne said. While Fiat “technically has the cash” to do a deal with the trust, a Chrysler IPO may be “the easiest way to monetize” the fund’s stake, Marchionne said.

Fiat isn’t in negotiations to acquire the trust’s stake, Marchionne said.

“I expect to work with them to find a way for them to exit at the right time,” he said. “But neither Chrysler nor Fiat is going to be pushed into a position. We’ll do it when it’s ready.”

Marchionne said he’s not sure how the trust could remain an equity partner because it’s “not an investment fund — they need to satisfy the obligations to the retirees.”

The $500 million that Turin, Italy-based Fiat will pay the U.S. government for its remaining stake puts the value of Chrysler at more than $8 billion, Marchionne said.

Marchionne is talking with the Canadian government about buying its holding in Chrysler.

Canada isn’t “going to get a better deal than I offered Treasury” on a pro-rata basis, he said. “It’s the deal. I have no other deal.”

Canada holds 1.7 percent of Chrysler, Eileen Wunderlich, a company spokeswoman, said in an e-mail last month.

Posted in Auto Industry NewsComments (0)

Page 7 of 11« First...56789...Last »