Fiat considers forming new spinoff company if GM Europe Acquired

May 3, 2009

(ChattahBox) — Italy’s Fiat SpA could seek a merger of its auto group with General Motors Corp’s Europe unit including Opel and its U.K. unit Vauxhall, then spin off the combined company and list it, Fiat said in a statement, on Sunday.  Fiat has been in rumored talks for months with GM over the purchase of a majority stake in Opel, but this is the first time they have confirmed the negotiations. Fiat Chief Executive Sergio Marchionne, believes his company needs to sharply ramp up its current production to stay viable in the future. The company would include the group’s Fiat, Lancia and Alfa Romeo brands along with Saab, Chrysler and GM Europe’s operations.

The Italian automaker said it would evaluate several possible new corporate structures, including a potential spin off of Fiat Group Automobiles into a a new publicly traded company with 80 billion euros ($106 billion) in annual revenues. In an interview with the Financial Times, Marchionne said: “From an engineering and industrial point of view, this is a marriage made in heaven.” He hopes 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. A deal with with GM for Opel isn’t expected to impact the Chrysler partnership, as Fiat sees the two deals as complementary. Chrysler forming the backbone of Fiat’s reentry into the U.S. market, while a deal with Opel would make Fiat one the biggest auto makers in Europe and Latin America. The company would have sales of 6 million to 7 million vehicles a year, second to Toyota Motor Corp. and roughly as many as Volkswagen AG.


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