Chrysler Group LLC, the U.S. car company run by Fiat SpA, may have an equity value of as much as $8 billion if it sells shares to the public in two years, Citigroup Inc. said.
Analysts led by John Lawson placed Chrysler's equity value to Fiat at 1.4 euros ($2.08) a share in a report issued today. Citigroup published the estimate, which implies a value for the third-largest U.S. automaker of $8 billion, following yesterday's presentation of the five-year business plan at Chrysler's Auburn Hills, Michigan, headquarters.
Chief Executive Officer Sergio Marchionne said the company will start reporting financial results in April and issue stock after 2010. Chrysler expects to break even on an operating basis next year, have net profit in 2011 and pay off government loans by 2014.
"What was revealed on liquidity seemed sound, so any lingering fears over bankruptcy should go away," said the Citigroup analysts, who are based in London. They rate Turin, Italy-based Fiat stock a hold.
Chrysler is majority-owned by a United Auto Workers union retiree health-care trust and 20 percent owned by Fiat after exiting court protection June 10. Fiat can increase its stake to 35 percent by achieving milestones, including building an efficient engine in the U.S. and selling a certain number of cars outside North America.
"An IPO of the Chrysler business by early 2011 looks increasingly likely," said Adam Jonas, a Morgan Stanley analyst, in a report issued today. "We believe even a partial achievement of targets can make this a reality." Jonas, who rates Fiat stock overweight, estimates Chrysler's equity value at about $6 billion.
