DETROIT — Chrysler’s plan for a public stock offering would ordinarily be cause to celebrate the automaker’s comeback from its government bailout and bankruptcy in 2009. But the company’s filing for the offering, which came late on Monday, is hardly a moment of triumph.
Chrysler is taking the step only under pressure from its second-largest shareholder, a trust set up to provide medical coverage for 115,000 retired auto workers and family members.
And while the offering would generate needed cash for the trust, it would also thwart plans by Fiat, Chrysler’s Italian parent, to acquire full ownership of the automaker.
Chrysler’s offering arises from an unusual conflict of interests, made possible by the remarkable turnaround at Chrysler since it was shepherded through bankruptcy four years ago by the federal government.
The United Auto Workers health care trust has the legal right to cash in a big chunk of its stake in Chrysler, which today stands at 41.5 percent and is a legacy of a deal brokered in 2009 by the Obama administration’s auto task force.
Now, with profits flowing again and the trust in need of cash, it has formally requested that Chrysler register for a public offering covering about 16 percent of the company’s overall shares.
The offering, however, is not supported by Sergio Marchionne, the chief executive of both Fiat and Chrysler and the architect of the US company’s revival. Marchionne wants to merge the two companies. To do so, he needs to acquire the trust’s entire 41.5 percent stake. But there is a wide gap between what Fiat wants to pay, and what the trust’s administrators believe the shares are worth.
“It’s a very, very high-stakes battle going on here,” said Harley Shaiken, a labor professor at the University of California-Berkeley. “Both sides are being quite strategic, and we’ll see how it plays out.”