UPDATE 2-Fiat CEO sees 50 pct chance of Chrysler IPO, prefers buyout

Thu Feb 28, 2013 7:01pm GMT

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By Bernie Woodall
    KOKOMO, Indiana, Feb 28 (Reuters) - Sergio Marchionne, the
chief executive of both Fiat and its majority-owned Chrysler
Group LLC unit, said he sees a 50 percent chance that Chrysler
will go public but would prefer that it be fully merged with
Fiat.
    Fiat shares ownership in the smallest U.S. automaker with a
retiree trust fund affiliated with the United Auto Workers labor
union. Marchionne said he would prefer that Italian automaker
Fiat buy the trust fund's holdings.
    "My preference is to be one single company," Marchionne told
reporters in Kokomo, Indiana, on Thursday. "We belong together."
    Over the last four years, the two automakers have been
blending their operations as Fiat has increased its stake in
Chrysler, said Marchionne, who has been CEO of both companies
since Chrysler emerged from bankruptcy in 2009.
    Fiat, however, has been odds with the trust fund over
Chrysler's worth. The fund is under pressure to squeeze as much
value as possible from its Chrysler holding to pay for medical
benefits.
    Marchionne was speaking at a plant in Kokomo, Indiana, where
Chrysler announced it would invest $374 million in four Indiana
plants to support production of its more fuel-efficient eight-
and nine-speed transmissions by the end of the year.
    The move will create up to 1,250 jobs in Indiana, including
as many as 850 jobs at the company's new Tipton Transmission
Plant, Chrysler said on Thursday. 
    Chrysler is spending $162 million to make a nine-speed
transmission at Tipton. Production at Tipton is expected to
start in the first quarter of 2014.
    About $212 million will be invested in the Kokomo
Transmission, Kokomo Casting and Indiana Transmission I plants
to make the eight- and nine-speed transmissions. The money will
be used to install additional tooling and equipment needed to
make Chrysler's eight- and nine-speed transmissions by the
fourth quarter of 2013.
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