Fiat eyes GM units in Europe
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Italian automaker Fiat, which is taking over Chrysler, said Sunday it was talking with General Motors Corp. about acquiring the U.S. company’s European operations.
Fiat said that over the next few weeks, Chief Executive Sergio Marchionne would be looking “to assess the viability of a merger of the activities of Fiat,” including its interest in Chrysler, with General Motors Europe into a new company.
GM’s European operations include the Opel brand in Germany and the Vauxhall brand in Britain, as well as Swedish automaker Saab, which GM has targeted for closure by the end of the year if it can’t find a buyer.
Fiat said that as part of the process, the company would “evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company that combines those activities with the activities of General Motors Europe.”
GM, which faces a June 1 deadline to reorganize its operations and avoid bankruptcy, has been seeking buyers for its non-core businesses, including Saab, Hummer and Saturn, and has said it will shut down its Pontiac brand.
Fiat, meanwhile, was said to be actively pursuing Opel even before the Chrysler deal was announced.
GM Europe spokesman Frank Klaas said the company had several possible investors, which he wouldn’t identify, but said, “We are in very good negotiations with them.”
Marchionne has said that Fiat, which sold close to 2.2 million cars last year, needs to achieve annual sales volumes of more than 5 million vehicles in order to flourish in the global auto market. Combining Fiat with Opel and Chrysler -- which includes the Dodge and Jeep nameplates -- would put the Turin company at or near that goal.
In an interview Sunday with Italian newspaper Corriere della Sera, Fiat Chairman Luca Cordero di Montezemolo called GM’s Opel an “ideal partner” and a possible takeover by Fiat an “extraordinary opportunity.”
A stand-alone Fiat auto group presumably would also include the Italian company’s other brands: Ferrari, Alfa Romeo, Maserati and Lancia. Fiat non-auto assets include subsidiaries that make trucks and agricultural and construction equipment.
“They’re going to be a global powerhouse, I guess. Who would have thought?” asked Erich Merkle, an independent auto industry analyst in Grand Rapids, Mich. “They seem to be on a buying binge right now, looking for cheap and distressed assets like Chrysler and Opel.”
But becoming a global player may not be in its best interests, Merkle said, noting the difficulty in assimilating acquisitions. He pointed out that “large isn’t necessarily indicative of success.”
Marchionne was scheduled to meet today with German government officials to discuss his plans for Opel, the Financial Times reported.
Opel has said that it needs $4.3 billion in government aid to survive the current economic crisis, which has caused global auto sales to plunge to their lowest levels in decades.
Unlike in the U.S., where the government has provided billions of dollars of aid to keep GM and Chrysler afloat, German officials have been reluctant to provide direct economic assistance to Opel. But they have suggested that they could guarantee loans to a major Opel investor.
Canadian auto parts maker Magna International Inc. also has expressed an interest in acquiring Opel, and there have been media reports that other parties also may be interested.
In its deal for Chrysler, Fiat initially will take a 20% stake in the American automaker, which filed for Chapter 11 bankruptcy protection the same day its deal with Fiat was announced.
Fiat’s stake would rise to 35% if it meets certain conditions, such as providing the American automaker with fuel-efficient cars and engine technology. It ultimately could gain a majority ownership position.
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The Associated Press contributed to this report.
