Fiat looking to force GM out of the boardroom
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.
[I]Only in Italy !!![/I]
