<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published May 5, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Fiat chief rolls out plan for European auto empire
The Italian carmaker needs up to 7b euros in aid from govts: Germany
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(BERLIN) The head of Italy's Fiat has outlined an 'interesting' plan to create Europe's biggest carmaker but will need five to seven billion euros (S$9.8 billion to S$13.8 billion) in financial support from governments, Germany's economy minister said.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Headed for merger? A Fiat 500 with flags bearing the Opel logo in Frankfurt yesterday. A Fiat-Opel combined group would be the world's second-biggest carmaker with sales of about six to seven million vehicles a year and 80 billion euros in revenues </TD></TR></TBODY></TABLE>Sergio Marchionne met senior officials in Berlin yesterday to present his ambitious vision of combining Fiat's car business with General Motors' (GM) Opel operations and Chrysler, with whom he sealed a partnership deal last week.
'It is an interesting approach, without question,' Economy Minister Karl-Theodor zu Guttenberg told reporters after meeting Mr Marchionne.
In Detroit, Chrysler yesterday asked the US Bankruptcy Court for a swift hearing into its planned sale to Italy's Fiat SpA, a proposal that brought immediate objections from some secured lenders.
Chrysler filed for bankruptcy on Thursday, planning an emergence from court protection in as little as 30 days under the guidance of Obama administration officials. The carmaker asked Judge Arthur Gonzalez to set a hearing as soon as May 21 to approve a US$2 billion sale of most of its assets out of bankruptcy that would clear the way for a merger with Fiat, according to documents filed with the court.
Mr Guttenberg said the German government, which is keen to save jobs at GM's Opel unit ahead of a September election, would look at the details of the plan and also consider other options.
All Opel's final assembly plants in Germany would be safe under Mr Marchionne's plan, said Mr Guttenberg, but an engines and parts factory in Kaiserslautern, in western Germany, may be hit.
Opel employs about 25,000 people in Germany and also has plants in Spain, Belgium and Britain.
Mr Guttenberg said Fiat was not planning on taking on new debt but that it would require some five to seven billion euros in bridge-financing and was seeking state guarantees from around Europe. Previously, Opel had said it required 3.3 billion euros in state guarantees.
German Chancellor Angela Merkel has said she is open to guarantees but has made clear a decision will depend on the feasibility of Opel's plans and on its finding a partner.
If Mr Marchionne's plan is realised, the combined group would be the world's second-biggest carmaker with sales of about six to seven million vehicles a year and 80 billion euros in revenues.
'The auto group spin-off has always been an option prized by the market as it brings out the stand-alone value of the auto business without the built-in discount that comes from a conglomerate like Fiat,' said Serge Escude, an analyst with Cassa Lombarda.
Mr Marchionne told the Financial Times that Fiat and Opel would reap synergies of one billion euros a year. He has argued that a carmaker must make more than five million vehicles a year to be able to turn a profit and said last year Fiat lacked the scale needed to survive the sector crisis alone. Analysts said planned job cuts could be a stumbling block to a deal.
'The big hurdle we can see is social cost,' said Michael Tyndall, of Nomura International. 'I'm not sure if the Italian or German governments have the appetite for the job losses a merger would entail.'
Opel labour leader Klaus Franz also sounded a cautious note. 'We will not be hostile to anyone but we will undertake a very careful risk analysis,' he told reporters at Opel's Eisenach plant, adding he wanted to be sure that any partner was interested in a long-term investment.
Mr Guttenberg said GM would have to take a view on the proposed deal and he noted the German government was also looking at other options. Austrian-Canadian car parts maker Magna is interested in Opel and there are other possible investors, possibly including sovereign wealth funds. -- Reuters
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Fiat chief rolls out plan for European auto empire
The Italian carmaker needs up to 7b euros in aid from govts: Germany
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(BERLIN) The head of Italy's Fiat has outlined an 'interesting' plan to create Europe's biggest carmaker but will need five to seven billion euros (S$9.8 billion to S$13.8 billion) in financial support from governments, Germany's economy minister said.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Headed for merger? A Fiat 500 with flags bearing the Opel logo in Frankfurt yesterday. A Fiat-Opel combined group would be the world's second-biggest carmaker with sales of about six to seven million vehicles a year and 80 billion euros in revenues </TD></TR></TBODY></TABLE>Sergio Marchionne met senior officials in Berlin yesterday to present his ambitious vision of combining Fiat's car business with General Motors' (GM) Opel operations and Chrysler, with whom he sealed a partnership deal last week.'It is an interesting approach, without question,' Economy Minister Karl-Theodor zu Guttenberg told reporters after meeting Mr Marchionne.
In Detroit, Chrysler yesterday asked the US Bankruptcy Court for a swift hearing into its planned sale to Italy's Fiat SpA, a proposal that brought immediate objections from some secured lenders.
Chrysler filed for bankruptcy on Thursday, planning an emergence from court protection in as little as 30 days under the guidance of Obama administration officials. The carmaker asked Judge Arthur Gonzalez to set a hearing as soon as May 21 to approve a US$2 billion sale of most of its assets out of bankruptcy that would clear the way for a merger with Fiat, according to documents filed with the court.
Mr Guttenberg said the German government, which is keen to save jobs at GM's Opel unit ahead of a September election, would look at the details of the plan and also consider other options.
All Opel's final assembly plants in Germany would be safe under Mr Marchionne's plan, said Mr Guttenberg, but an engines and parts factory in Kaiserslautern, in western Germany, may be hit.
Opel employs about 25,000 people in Germany and also has plants in Spain, Belgium and Britain.
Mr Guttenberg said Fiat was not planning on taking on new debt but that it would require some five to seven billion euros in bridge-financing and was seeking state guarantees from around Europe. Previously, Opel had said it required 3.3 billion euros in state guarantees.
German Chancellor Angela Merkel has said she is open to guarantees but has made clear a decision will depend on the feasibility of Opel's plans and on its finding a partner.
If Mr Marchionne's plan is realised, the combined group would be the world's second-biggest carmaker with sales of about six to seven million vehicles a year and 80 billion euros in revenues.
'The auto group spin-off has always been an option prized by the market as it brings out the stand-alone value of the auto business without the built-in discount that comes from a conglomerate like Fiat,' said Serge Escude, an analyst with Cassa Lombarda.
Mr Marchionne told the Financial Times that Fiat and Opel would reap synergies of one billion euros a year. He has argued that a carmaker must make more than five million vehicles a year to be able to turn a profit and said last year Fiat lacked the scale needed to survive the sector crisis alone. Analysts said planned job cuts could be a stumbling block to a deal.
'The big hurdle we can see is social cost,' said Michael Tyndall, of Nomura International. 'I'm not sure if the Italian or German governments have the appetite for the job losses a merger would entail.'
Opel labour leader Klaus Franz also sounded a cautious note. 'We will not be hostile to anyone but we will undertake a very careful risk analysis,' he told reporters at Opel's Eisenach plant, adding he wanted to be sure that any partner was interested in a long-term investment.
Mr Guttenberg said GM would have to take a view on the proposed deal and he noted the German government was also looking at other options. Austrian-Canadian car parts maker Magna is interested in Opel and there are other possible investors, possibly including sovereign wealth funds. -- Reuters
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