Recent Fiat deal implies a $22BN enterprise value for Chrysler, LLC.

In the spring of 2009, the senior secured debt of Chrysler LLC, America’s number
three auto manufacturer, was trading at about 15 cents on the dollar, putting a
value of about $1 billion on the lagging car company. As part of the company’s
bankruptcy and restructuring, the U.S. government agreed to pay $2 billion to
the holders of this debt to buy them out. A few days ago, Fiat – which entered
into an alliance with Chrysler as part of the restructuring – agreed to buy an
additional 16 percent of Chrysler for $1.27 billion, which equates to a total
enterprise value for Chrysler of $22.4 billion. How remarkable that a company
given up for dead just two years ago could now be worth more than $22 billion!
That statistic speaks volumes about the ability of markets to behave
irrationally – the shares of auto related companies like Dana have shown
similarly exponential growth over the past two years – but it also says much
about the exceptional job that Chrysler’s new CEO, Sergio Marchionne, and his
team have done, outperforming by virtually every relevant metric.