Blog: Dave LeggettAre we doing a deal or are we doing a deal?

Dave Leggett | 2 February 2005

Looks like Fiat and GM are not yet doing a deal. Fiat says it is now free to exercise the put and GM claims that all options are still open. I guess it's a simple question of the two sides being too far apart on the question of what sort of compensatory sum for Fiat is fair in return for Fiat not exercising the put option that forces GM to take Fiat Auto.

I must admit to being a little surprised - GM had a board meeting yesterday and I expected to wake up this morning to the joyous news that a deal had been struck. I'm still trying to get my head around the psychology at work here, on both sides. I'd have thought that smoothing things over and ending the mess would have been a priority all round, but it would seem that both sides are perhaps more interested in being able to claim a 'victory' to their respective constituencies in Detroit and Turin/Rome. That doesn't augur well for quick resolution here-on-out. Fiat is probably holding out for a big sum - Fiat needs the money - and GM doesn't want to appear to be handing over too much (and set against GM's troubled loss-making European operations, it wouldn't exactly look ideal). I can hear the sound of feet being stamped.

Okay, let's play hardball


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