Thursday, May 7, 2009

Fiat is in talks to buy GM's European operations

Italian car company Fiat SpA, which is pressing ahead with a takeover of Chrysler LLC, confirmed Sunday it is in talks to buy General Motors's European operations.

If the deal goes through, the car and truck manufacturer would have about $105 billion US in annual sales, Fiat said in a release.

Fiat, whose brands include Fiat, Alfa Romeo and Ferrari, said it's evaluating the possible spinoff of its Fiat Group Automobiles business to form a new company.

"As part of this process, the group 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."

The statement was issued one day before a Berlin meeting between Fiat Group chief executive Sergio Marchionne and Germany's economy and foreign ministers to discuss the company's offer for GM's German unit, Opel.

GM Europe also includes the British company Vauxhall and the Swedish carmaker Saab.

GM has been trying to find investors for its noncore and unprofitable assets as part of a restructuring in which it has sought billions of dollars in aid from the U.S. and Canadian governments to avert collapse.

Opel has said it needs $4.3 billion US to get through the economic crisis. The German government has said it doesn't foresee giving direct state aid. German Chancellor Angela Merkel has suggested the government could help an Opel investor with loan guarantees.

In an interview Sunday with the 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."

Fiat is not the only suitor for Opel. Last week, Canadian car parts maker Magna International Inc. presented German Economy Minister Karl-Theodor zu Guttenberg with what the minister called a "rough concept for a commitment with Opel."

The German government would wait to determine its role in any full or partial Opel sale until after the U.S. government had weighed in, Guttenberg has said.

On Saturday, Chrysler filed a motion to sell substantially all of its assets to Fiat, but the ailing automaker must still deal with creditors who refused to come to a deal to erase the company's debt.

In addition to Fiat Group Automobiles, the Fiat Group also includes its agricultural vehicles branch CNH and its Iveco trucking unit, as well as a media arm.

With files from The Associated Press