Marchionne to Investors: Chrysler IPO Is a Bad Idea

Fiat-Chrysler CEO Sergio Marchionne has advised a London conference for investors that they would be wise to avoid a possible future initial public offering of Chrysler shares, Reuters reports.

Attendees tell the news service that Marchionne expects to achieve a profit margin of 7%-8% by 2015. Reuters says he implied that investors would gain more by buying Fiat stock after the company fully merges with Chrysler.

A full merger hinges on Marchionne's ability to negotiate a direct sale price for the 41.5% of Chrysler that Fiat doesn't already own. But the Italian company has been unable to agree on a price for the stake, which is held by a union retiree healthcare trust.

The trust calculates that its holding is worth about $5 billion (€3.7 billion). Fiat has offered roughly $4 billion (€3 billion). Under terms of its ownership, the trust forced Chrysler last week to file for an IPO that could launch early next year.

The IPO would establish a share price for the trust's holding. But it also would block a full merger. Many analysts expect the two sides to reach agreement before the offering goes forward.