Fiat makes bid to buy OpelThu, 23 Apr 2009
The proposed partnership between Fiat and Chrysler has been thrown into a tailspin with revelations that the Italian carmaker has made a secret offer to purchase a majority stake in Opel.
Klaus Franz, chairman of Opel's works council, on Thursday confirmed Fiat's interest in a takeover of General Motors' European subsidiary, suggesting that officials have cleared the way for the signing of a letter of intent as early as April 28.
Opel has been in talks with parts supplier Magna International on a possible partnership over the past month. However, talks between the two companies apparently have broken down following Fiat's surprise bid.
Officials from GM in Detroit and German government officials are said to back Fiat's plans for a quick takeover of Opel. However, high-ranking Opel officials are rumored to favor a partnership with Magna.
Franz has vowed to block any move by Fiat to take over Opel, saying it would lead to "dramatic job losses and factory shutdowns in Germany" because of overlaps in their product lineups.
Fiat has a range of brands, including Alfa Romeo, Lancia, Maserati and Ferrari.
Franz also suggests that Fiat is deep in debt and would only be a further financial drain on Opel, which recently appealed to German Chancellor Angela Merkel for a government financial-rescue package.
"We known the bride," Franz said in an interview with the Deutsche Press Agency, referring to Fiat's earlier failed partnership with GM, which broke down in 2005 and led to GM paying Fiat some $2 billion to cancel an option to buy Fiat.
Fiat and GM established a joint venture in 2000 that led to cooperation on small-car platforms and engines, including those used in the Fiat Punto and the Opel Corsa models. At the time, GM received at 10 percent stake in Fiat. However, this was dissolved following a breakdown in the relationship between the two.
The purchase of Opel was made more attractive this week following a decision by GM to hand back patents and intellectual-property agreements it secured from Opel in return for an injection of capital in 2005. GM subsequently used them as bond in terms to secure financial loans from the U.S. government.
By Greg Kable