Fiat CEO in Berlin to pitch plan for Europe giant
Written on May 5, 2009
Fiat SpA’s chief executive visits Berlin on Monday to try to convince Germany’s political leaders to sign up to his vision for a new European car giant by letting him take over General Motors Corp’s Opel unit.
Sergio Marchionne goes to Berlin with a one-month deadline in his sights, a newspaper report said, less than a week after he sealed a deal with Chrysler to form a partnership.
His plan would involve spinning off Fiat’s core car business into a new company including Chrysler and GM Europe and listing it on a stock exchange.
“An agreement in principle has to be struck in 30 days,” he said in an interview in the Financial Times on Monday about a deal with Opel.
Fiat’s shares jumped 6.5 percent in early Milan trade while the DJ Stoxx European auto sector rose 1.1 percent.
Combining with Chrysler and Opel fits in with Marchionne’s strategy for guiding Fiat through the auto industry’s current crisis.
He has often said a carmaker had to make more than 5 million vehicles a year to be able to make a profit, and in December he said Fiat did not have the scale to survive the shake-out as a standalone company.
A Fiat statement on Sunday said Fiat, Chrysler and GM Europe would together have annual revenues of about 80 billion euros ($106.3 billion). It did not mention Opel, which makes up 80 percent of GM Europe’s revenue fast online cash advance.
Marchionne told the Financial Times that Fiat and Opel would reap synergies of 1 billion euros a year from the deal.
“From an engineering and industrial point of view, this is a marriage made in heaven,” he was quoted as saying.
The biggest opposition to a deal between Fiat and Opel will come from the unions in both countries. They fear the eventual cost savings to come out of a merger would lead to job cuts and plant closures.
The new company, tentatively called Fiat/Opel, would merge their small B and midsize C segment car platforms, and absorb Fiat’s ultra-small A platform and Opel’s upper-middle D platform, the Financial Times said.
‘OPPORTUNITY FOR EUROPE’
Marchionne plans to ask the British government and administrations in other European countries where Fiat and Opel have plants, to offer the new company loan guarantees, the FT said.
He will say the deal is important for Europe, currently being battered by an economic downturn, the paper said.
“This is a real opportunity to make the European Union work as a union,” he was quoted as saying. “If we don’t do this, it’s a failure of our efforts to create a single market.”
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