Chrysler IPO…Fail?

Chrysler Group LLC has withdrawn its planned IPO. See the filing here. Earlier this year I posted about firms that file for their IPO as a mechanism to attract M&A bids. This is a similar example. Instead of completing the IPO, Chrysler scrapped it after Fiat agreed to buy the ownership stake that was to be sold in the IPO. Fiat bought ~41.46% of Chrysler owned by the union. The stake had been for sale (to Fiat, among other buyers) but the groups could not agree on a valuation. The IPO filing created a credible threat that forced Fiat’s hand, but also served as a price discovery process and allowed both sides to better realize a fair market value for the stake. A properly orchestrated IPO can serve several purposes.