Fiat looking to force GM out of the boardroom

[Matra et Alpine]

Fiat board to meet amid reports of GM deal



MILAN (Reuters) - Fiat's board is due to meet today, a source close to the company says, as newspapers reported that the Italian carmaker was close to settling a long-running wrangle with U.S. partner General Motors.

The source said on Sunday Fiat's board would meet in the "early afternoon" once Fiat Chief Executive Sergio Marchionne got back from the United States. He gave no further details.

On Sunday, Italian newspapers reported that Fiat and GM were set to announce a settlement to scrap a disputed put option that would have allowed Fiat to force GM to buy its loss-making car unit.

Papers said GM would pay Fiat about 1.5-1.8 billion euros (1-1.2 billion pounds) in cash to cancel the put and change the structure of a joint venture in engines and platforms in Fiat's favour.

Nobody at Fiat or GM was immediately available to comment.

Newspapers said Fiat's board could yet reject the settlement offer and instead decide to exercise the put option, saddling GM with another unprofitable car business as it battles to return its European arm to profit.

Investors have long been expecting a cash payment of about 1.8 billion euros but analysts are quick to point out that a cheque that big would cover little more than one year of Fiat Auto's cash burn.

Fiat executives hope that dissolving the five-year partnership with GM will free it to set up new joint ventures with other auto groups to share costs and achieve its target of pulling Fiat Auto back to profit in 2006.

Media reported that the settlement would include GM handing Fiat its 50 percent share of their powertrain joint venture. Fiat would continue to supply GM Europe with its diesel engines -- a vital component in Europe where diesel now accounts for about 40 percent of car sales.

GM and Fiat also have a joint venture in purchasing, which sources say already benefits Fiat as it is playing with the world's largest carmaker, which can squeeze better deals out of suppliers.

Fiat's Marchionne has long said he wants more joint ventures, possibly along the lines of its accord with PSA Peugeot Citroen to make vans and multi-purpose vehicles together. Many other carmakers have joined forces on individual market segments.

A slump in sales and fierce competition knocked Fiat Auto to a record loss of in 2002 and the 106-year-old carmaker is not due to return to profit until 2006.




Only in Italy !!!

[Coventrysucks]

How long untill there are only 5 car manufacturers left do you think...

[henk4]

It looks like the V6 Alfa engine might not be going to be replaced with a GM thing.

[baddabang]

General Motors cant even keep its own cars on the road. What are they going to do in Italy?

[DasModell]

Originally Posted by henk4

It looks like the V6 Alfa engine might not be going to be replaced with a GM thing.

that's good news .. but let's hope it's not too expensive .

[Alfist-GTV6]

GM, Fiat Reach Deal Over Put Option
Sunday, February 13, 2005

MILAN — General Motors Corp. (GM) will pay Fiat $1.99 billion in a deal to drop an option which would have forced the U.S. giant to buy the Italian firm's loss-making car unit, GM said in a statement.

In the statement, GM said both the Fiat-GM Powertrain (search) and the purchasing joint ventures would be dissolved.

GM will also acquire an interest in "key strategic diesel engine assets and other important rights" through the deal.

GM will return its 10 percent stake in Fiat Auto (search).

A mediation process to sort out the row over the put option ended in stalemate earlier this month but sources said GM and Fiat had continued to negotiate a settlement and avoid a lengthy, distracting court battle.

GM insisted Fiat had invalidated its option to sell 90 percent of Fiat Auto because of restructuring moves at the Italian carmaker. Fiat rejected that and promised to defend the put, which was core to its valuation.

Fiat Chief Executive Sergio Marchionne had threatened to exercise the put any time from Feb. 2 to force a quick valuation of Fiat Auto and squeeze a deal out of GM, not necessarily as a prelude to a sale.

Investors had hopes GM and Fiat would reach an out-of-court settlement, with estimates in news reports ranging from 1.0-1.8 billion euros.

FOXNews.com

[Cadillac Imaj]

humph.....

[Coventrysucks]

Guess what Fiat are buying with (some of) that $1.99 billion?


Maserati!

[henk4]

Originally Posted by Coventrysucks

Guess what Fiat are buying with that $1.99 billion?

Maserati!

There is another story behind that. They did buy Maserati off Ferrari, which sounds odd. But as long as Maserati is still not profitable, the value of Ferrari will be affected. This is of particular importance with the prospective floating of Ferrari shares to attract foreign capital. Ferrari share values are likely to be much higher without Maserati than with.
And buying Maserati buy fiat will not see much of a cash transfer anyway, as they already are part owners.

[Cadillac Imaj]

yeah.

[henk4]

Originally Posted by Cadillac Imaj

yeah.

meaning what??