Fiat chief Sergio Marchionne has denied reports the Italian carmaker is interested in buying General Motors’ European unit Opel.
It has been reported that GM may be open to the idea of selling Opel but Marchionne told reporters he is not interested.
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Fiat looked at the possibility of trying to take over the European brand two years ago when GM went into Chapter 11 bankruptcy – the Italian auto maker is now focused on its new US partner, Chrysler.
Marchionne told reporters that he is reluctant to take over the stake held by Chrysler’s last major shareholder, the union’s trust fund VEBA.
He said the easiest way for VEBA to get rid of its 45.7% stake in Chrysler was through an initial public offering.
Speaking on the sidelines of a presentation of the new Fiat Freemont, which is based on the Dodge Journey, Marchionne added: “The real answer is we cannot jeopardize the rating of Fiat to get this done.”
This refers to the risk that Fiat’s credit rating would face if the company were to take over 100% of Chrysler, because it would have to consolidate the debt held by both car makers. Fiat is rated below investment grade by credit rating agencies.
Dow Jones Newswire notes that in a regulatory filing last week, Fiat said Chrysler is more highly leveraged and has a lower rating than Fiat. At the end of March, Fiat’s total cash maturities stood at EUR15.6bn (US$22.3bn), with EUR6.4bn (US$9.1bn) coming due in the next 12 months, according to a presentation recently posted on its website.
At the end of March, Fiat had EUR13.1bn (US$18.8bn) of cash, which Marchionne has described as a cushion to protect the company from the next downturn in the market. Part of that cash has been used by Fiat to increase its stake in Chrysler.
Marchionne also said Fiat had started talks with Canada’s federal and provincial governments to buy their joint, almost 2% Chrysler stake, adding that he expected to reach an agreement soon.
Dow Jones noted that by the end of the year, Fiat aims to have 57% of Chrysler.
