Sullivan, Cravath Set to Steer Chrysler to IPO
Almost three years after rival General Motors made its triumphant return to the public markets through an initial public offering, fellow U.S. automaker Chrysler Group is headed for a similar listing that could raise up to $1 billion.
A prospectus filed with the SEC on Monday lists Sullivan & Cromwell corporate and capital markets partner Scott Miller as counsel to Auburn Hills, Michigan–based Chrysler, which is majority owned by Italian automaker Fiat.
Miller, who is based in New York, was named an Am Law Daily Dealmaker of the Week in January 2009 for his role advising Turin-based Fiat on its purchase of a stake in the then-struggling Chrysler. Miller is also a longtime legal adviser to fast-driving Fiat CEO Sergio Marchionne, whose company initially took a 35 percent stake in Chrysler after it exited U.S. government-backed bankruptcy proceedings in June 2009.
Fiat moved to increase its stake in Chrysler to 58.5 percent in early 2011, according to our previous reports. Fiat and Marchionne, the latter a lawyer of Italian and Canadian descent, have spent about $2 billion accumulating that position.
For the better part of this year Fiat and Marchionne have been trying to acquire the 41.5 percent in Chrysler they don’t already own from the Chrysler Voluntary Employee Beneficiary Association (VEBA), a health care trust affiliated with the United Auto Workers union. Fiat failed to persuade a Delaware Chancery Court judge in July to set a value for some company shares and Bloomberg reported earlier this month that a trial in the matter might have to wait until 2015. (Fiat's in-house legal chief is Roberto Russo.)
While the two sides have been unable to agree on a purchase price, a potential IPO for Chrysler would allow the capital markets to set such a price, according to various news reports. Profits at Chrysler have quadrupled in recent months, leading Fiat to tap into the U.S. automaker’s success as the European market struggles. (Fiat's acquisition of all of Chrysler could hasten a merger between both companies.)
William Fogg, the managing partner of Cravath, Swaine & Moore's corporate practice, and Cravath corporate partner William Rogers Jr. are advising underwriters on the potential offering led by JPMorgan Chase. Legal fees and expenses related to the IPO are not yet available, nor are pricing terms for a listing that could take place by the first quarter of 2014.
U.S. Senate records show that Chrysler has paid $360,000 apiece to Venable and Washington, D.C.–based government affairs firm Mehlman Vogel Castagnetti for lobbying work since January 2012. Bruce Mehlman, a name partner at the latter firm, is the brother of Kenneth Mehlman, a former Akin Gump Strauss Hauer & Feld partner and current global head of public affairs at private equity giant KKR. (Ken Mehlman, who made headlines this summer for his support of gay marriage, is also a former chair of the Republican National Committee.)
Both Mehlman Vogel Castagnetti and Venable are lobbying for Chrysler in connection with legislation pertaining to fuel standards and emissions, alternative fuel incentives, greenhouse gases, tax reform and pension fund issues, and the Obama administration’s Patient Protection and Affordable Care Act.
Washington, D.C.–based public policy and government affairs shop the Prime Policy Group is also handling lobbying work for Chrysler on “general automobile issues,” according to Senate filings. Joseph “Jody” Trapasso, Matthew Forman, Kristina Pisanelli, and Alexandra Perkins are leading Chrysler’s in-house lobbying team.