Fiat chief executive Sergio Marchionne is meeting with advisers and German government officials until Wednesday at which point he will submit a non-cash offer for General Motors’ unit Adam Opel AG, a person familiar with the situation said on Monday.
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According to Dow Jones Newswires, Marchionne said on Friday he would make the offer by 20 May, the German government’s deadline. He wants to buy GM’s European operations, including Opel, as part of his plan to tap government financing to create one of the world’s largest automakers.
“The plan that Fiat has been drafting with its advisers doesn’t include plant closures in the European countries where the US-based carmaker is currently operating,” the person told Dow Jones, adding Fiat isn’t going to offer any cash to GM for its European operations.
Unlike GM in the US, GM Europe doesn’t have the option of filing for bankruptcy protection, because its operations in Europe are spread out across a number of countries, the news agency noted. Therefore Fiat, its advisers and the German government are scrambling to come up with a decision before the US Treasury’s deadline for GM of 1 June.
GM’s announcement on Friday that it intends to cut 1,100 dealerships was seen as an indication it may file for bankruptcy protection soon, the report said, but Fiat’s plan for GM Europe is not contingent on GM filing for bankruptcy, the person familiar with the situation told Dow Jones on Monday.
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By GlobalDataThe German government has made contingency plans to protect Opel should GM file for US bankruptcy before a final plan is agreed for its sale.
While Klaus Franz, head of the workers’ council at Opel, fears Fiat’s move could eliminate 18,000 jobs across Europe, Dow Jones noted that Marchionne managed to pull Fiat out of losses in recent years without shutting any plants, partly through the selective trimming of staff.
Europe’s car industry is plagued by overcapacity, and Marchionne wants to migrate Fiat and Opel models on to the same platforms, saving money.
The industrial plan drafted by Fiat also includes the reduction of models produced by Opel and Saab, the person told Dow Jones. This could pave the way for Fiat to reduce costs and have more long-term synergies across Europe.
Ironically, GM and Fiat shared platforms and engines – still used in current models – under an earlier cooperation agreement that GM paid to extricate itself from.
