Fiat shares fell on Monday after the US government warned that its planned partner Chrysler faced an uncertain future and set a deadline for an alliance.
Fiat’s shares fell 5.03% on the Milan stock exchange, which was sharply down 3.89% overall, according to AFP.
US president Barack Obama’s autos task force said on Monday Chrysler was unlikely to remain viable unless it manages to find a partner. It gave Chrysler 30 days to reach a deal with Fiat to qualify for more US government loans.
The two companies in January signed a preliminary deal for Fiat to take a 35% stake in Chrysler.
“In essence, the US administration is forcing Chrysler into an alliance with Fiat, but reversing the order: first an alliance and then, possibly, the funding,” a Mediobanca analyst told Dow Jones Newswires.
“That implies more risk for Fiat, which would be taking a stake in a company in a worse financial state than previously thought, which could improve if the government were to give it more funding.”