Italian carmaker Fiat, which jointly owns US automaker Chrysler, said the initial public offering of Chrysler Group LLC would not happen this year, prolonging the uncertainty over whether it could reach a deal to buy the stake in the group it did not already own, The Irish Independent newspaper reported.
The IPO, which, chief executive Sergio Marchinonne previously said could take place in 2013, was expected to shed light on the US carmaker's value and help settle the stand off with joint owner, a voluntary employee beneficiary association, (VEBA).
"The board of directors of Chrysler Group has determined that it will not be practicable for Chrysler Group to launch and complete an initial public offering prior to the end of 2013," Fiat said in a statement.
According to the statement, it expected Chrysler to work towards an IPO in the first quarter of 2014, adding however that it could not say if and when such an offer would happen as it would depend on "market conditions and other relevant considerations".
Meanwhile, Bloomberg reported that the IPO was delayed due to the automaker's inability to resolve a routine tax issue in time to complete the sale this year. The report cited three people with knowledge of the matter.
According to the people, Chrysler needed a letter from the US Internal Revenue Service to clarify tax liabilities following the IPO and did not want to proceed without it, according to the people who asked not to be identified because the matter was private.
Chrysler Group LLC was likely to set a price range for its IPO as early as this week to raise $1.5 billion to $2 billion, The Wall Street Journal reported yesterday, citing people familiar with the matter.
According to the newspaper, the US automaker would be expected to complete the offering in the first half of December in a bid to beat the IPO market slowdown around the holidays.
The company had added four banks to help underwrite the IPO, while the it was looking to launch the deal as soon as early December.
The automaker, filed paperwork to go public in late September following the inability of Fiat to reach a buyout deal with Chrysler's second-largest shareholder, a retiree healthcare trust affiliated with the United Auto Workers union.
Fiat which owns 58.5 per cent of Chrysler, intends to take full control of the automaker and buy out the rest of the stock owned by VEBAS but has reservations over the $5 billion being demanded.
The trust then invoked a right enshrined in Chrysler's 2009 government-financed bankruptcy to take the company public, in order to pile up pressure on Marchionne, chief executive of Chrysler and Fiat, to reach a deal.
Marchionne has been working to combine the two companies for four years to better compete with the likes of Volkswagen AG, Toyota Motor Corp and General Motors Co, the other automaker bailed out with a government-financed bankruptcy in 2009. The US plans to sell its final 31.1 million GM shares by the end of the year.