Fiat SpA, the Italian carmaker that helped Chrysler Group LLC emerge from bankruptcy, may wait to turn around the U.S. business before deciding on a share sale or spinoff for its automotive division.
The Italian company's stock has risen 19 percent this month on speculation that Chief Executive Officer Sergio Marchionne may carve out Fiat's biggest unit as a new company. Fiat executives have so far sent mixed signals about whether an initial public offering of the division will take place.
A separation of the auto manufacturing operations, which generated 56 percent of Fiat's revenue last year, would give Marchionne an entity to facilitate future alliances, and a share sale would generate cash for international expansion. The maker of Puntos and Ferraris must show progress at Chrysler, of which it owns 20 percent, before convincing investors to buy shares in the unit, said Royal Bank of Scotland analyst Jose Asumendi.
"Fiat has too much on its hands right now to think about a possible spinoff," said London-based Asumendi, who advises holding Fiat's stock. "The priority is to resurrect Chrysler, make it profitable and repay its government loans."
Fiat Automobile, not including Fiat's 20 percent stake in Chrysler, is worth about 5.9 billion euros ($8 billion), or 53 percent of Fiat's market value, said Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London. "Get the U.S. strategy right and in six years time, Fiat Auto could be worth 20 percent more."
Holding Pattern
Fiat derives the remainder of its revenue from units including truckmaker Iveco SpA and CNH Global NV, an agricultural and construction machinery maker.
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