Fiat offers $125 million for Canada's Chrysler stake: CEO

Fiat has offered $125 million to buy the Canadian government's 1.7 per cent stake in Chrysler Group LLC, as it moves swiftly to increase its control of the US automaker, Fiat CEO Sergio Marchionne said on Saturday.

Marchionne, who is also the CEO of Chrysler, said that if Fiat could reach a deal with VEBA -- the United Auto Workers' healthcare trust -- over the fund's 45.7 per cent stake in Chrysler, a Chrysler IPO may "no longer be necessary."

An IPO of Chrysler would allow the VEBA to cash out of its position in the company. Marchionne said on Friday a public share offering for Chrysler was more likely in 2012 than this year.

Fiat already has an option on 40 per cent of VEBA's shares.

"We presented an offer last Thursday for the Canadian government stake," Marchionne told reporters in Venice on the sidelines of a conference.

The US Treasury agreed on Thursday to sell Fiat its remaining 6 percent equity stake in Chrysler for $500 million, raising Fiat's holding to 52 per cent when the deal is completed.

Fiat is also paying $75 million for the Treasury's option to buy all Chrysler shares held by VEBA.

However, sources familiar with VEBA''s strategy said on Friday it would retain its shares of Chrysler in a bid to maximise returns for retiree healthcare costs.

The sources said the fund was considering a range of options to cash in on its stake at a time when the value of that investment is rising.

Marchionne, the Italian-Canadian manager who has made Fiat one of Europe's top turnaround stories, said a rebound in Italy''s car sales in May -- the first rise after 13 straight monthly declines -- pointed to a "reversal of the trend."

Marchionne also said he had no intention of moving Fiat's headquarters from Turin in Italy to the United States, a sensitive issue in Fiat's home country.