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Price haggling produces a big showdown.
The FT reports Chrysler plans to file for an IPO this week. The move comes after failure to reach a deal following months of talks between its majority owner, Fiat, and the union-affiliated healthcare trust that owns the rest of Chrysler.
The two sides are miles apart on a valuation for the Detroit automaker. Fiat values Chrysler at $4.2 billion, which is less than half of what the trust says it's worth. UBS analysts say the stake is worth about $4 billion.
The trust wants to cash out of its stake fast, but it hopes to get a higher price from investors or get Fiat to up its offer. Fiat is hoping the market will show its offer is the trust's best bet.
ICBPI analyst Luca Arena said, "It's in the interest of both parties, but of Fiat in particular, to reach an agreement before a Chrysler IPO."
That's because an IPO could make it harder for Fiat to buy those remaining shares. Fiat wants to merge the two companies. It hopes to tap Chrysler's cash flow to offset its losses in Europe so it can better compete against the likes of GM and Volkswagen.
Fiat's shares, which have rallied more than 60 percent this year, didn't move much on the news.
Fiat CEO Sergio Marchionne told the FT the listing could take place as early as this year but was more likely to occur in the first quarter of 2014.