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Chrysler adds four underwriters as it eyes December IPO: sources

A sign is shown at the Massey-Yardley Chrysler. Dodge, Jeep and Ram automobile dealership in Plantation, Florida October 8, 2013. REUTERS/Jo
A sign is shown at the Massey-Yardley Chrysler. Dodge, Jeep and Ram automobile dealership in Plantation, Florida October 8, 2013. REUTERS/Jo

By Soyoung Kim and Olivia Oran

NEW YORK (Reuters) - Chrysler Group LLC has added four banks to help underwrite its proposed initial public offering, as the U.S. automaker looks to launch the deal as soon as early December, according to people familiar with the matter.

Barclays Plc , Goldman Sachs Group , Morgan Stanley and UBS AG have been appointed as bookrunners in the offering, which is being led by JPMorgan Chase & Co and Bank of America Merrill Lynch , the people said on Wednesday.

The IPO could price in December, the people said, declining to be identified because the information is private.

Chrysler declined to comment. Representatives for the banks either declined to comment or did not respond to requests for comment.

Chrysler, which is majority owned by Italian automaker Fiat SpA , filed paperwork for an IPO in late September after Fiat was unable to reach a buyout deal with Chrysler's second-largest shareholder, a retiree healthcare trust affiliated with the United Auto Workers union.

While the IPO could happen within weeks, analysts have said that the healthcare trust and Fiat will come to terms on a buyout before the first shares are sold.

Sergio Marchionne, chief executive of both Fiat and Chrysler, has said he wants to merge the two companies to create the world's seventh-largest carmaker.

Chrysler has come a long way from being nearly dead in 2009 when Marchionne, along with the U.S. Treasury and the UAW, agreed to a restructuring deal that left Fiat with 20 percent ownership.

Chrysler is now a profit center for Fiat, which has been hurt by the sagging sales for automobiles in Europe while Chrysler's home North American market has seen sales rise nearly 50 percent since 2009.

Fiat's ownership has grown to 58.5 percent and the UAW-affiliated health care trust for retired Chrysler workers owns 41.5 percent.

The VEBA healthcare trust and Fiat so far have remained far apart on valuing the No. 3 U.S. automaker. Some analysts have said the company is worth around $10 billion.

Analysts have said that Fiat and the VEBA will come to terms ahead of the IPO, even just hours before the launch of the offering, because by then a market value for Chrysler will be set.

In October, Marchionne said he hoped the IPO process would give a clear sense of Chrysler's worth.

"One of the things I hope is that it will become very clear exactly what the markets think Chrysler is worth, which is the only real reference point," Marchionne said on October 3 in Italy.

"There's a pretty clear process that leads to the IPO, and it places clear road markers that can be recognized by both sides," he said.

UAW trusts for retired auto workers were set up in 2007 at Chrysler, as well as at General Motors Co and Ford Motor Co as a way for the financially struggling U.S. automakers to offload their obligation to pay retiree healthcare benefits.

The trust was initially supposed to be funded with cash. But as part of the 2009 financial crisis, the union agreed to take stakes in GM and Chrysler in lieu of cash.

(Reporting by Soyoung Kim and Olivia Oran in New York; and Bernie Woodall in Detroit, Editing by Bernard Orr)

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