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Fiat to Bid for GM Europe, Chrysler

Posted May. 05, 2009 06:15,   


Italy’s largest carmaker Fiat announced yesterday plans to transform the global automotive landscape by buying the European operations of General Motors and the bankrupt Chrysler.

Upon completion of the two deals, Fiat will rise from ninth to third in global auto production, with output to exceed six million vehicles per year.

“We’re considering a plan to acquire Chrysler and GM’s European operations to create a new company,” the Italian automaker said, indicating its plan to buy Germany’s Opel, a GM affiliate.

Fiat CEO Sergio Marchionne yesterday began negotiating with Germany’s economy and finance ministers. Opel in February asked the German government to provide bailout funds of 3.3 billion euros (4.4 billion U.S. dollars). Berlin promised support for the company acquiring Opel.

Fiat said, “If we acquire Opel and Chrysler, we will evaluate several corporate structures, including the potential spin-off of Fiat Group Automobiles and the subsequent listing of a new company combining those activities with those of GM Europe.”

Fiat has several car brands including Fiat, Alfa Romeo and Ferrari.

If the plan proceeds, Fiat will turn into a mammoth carmaker producing six million to seven million vehicles with revenues of 80 billion euros (106 billion dollars) per year, comparable to the performances of Toyota, GM or the Volkswagen-Audi Group.

In an interview with the Financial Times, Marchionne said, “I hope to complete the transaction by the end of May and list shares of the new company, tentatively called Fiat/Opel, by the end of the summer.”

Fiat’s aggressive move is highly likely to spark further consolidation in the global car industry, but problems could arise in negotiations given opposition to the deal by Opel’s unions and German politicians. Marchionne has pledged not to close any car assembly plants in Germany and that Italy will share in any job cuts.