According to a Reuters report, shares in Italy’s Fiat gained on Monday as investors bet an emerging rescue plan by takeover expert Roberto Colaninno would inject new cash into the crisis-hit car maker.
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Reuters said Fiat stock rose as much as 6% on the first trading since Colaninno, lauded for his ground-breaking takeover of Telecom Italia in 1999, confirmed he would present a new recovery plan for Fiat.
“The market is betting that Colaninno will become a Fiat shareholder and will inject new cash,” one trader told the news agency. Fiat’s shares piled on gains despite a a stony welcome from the controlling Agnelli family and Fiat’s creditor banks.
Reuters noted that Colaninno, who has his pockets full from the sale of his Telecom Italia stake, said late on Friday he was studying a “friendly plan” that foresees his direct involvement in Fiat.
According to Reuters, Fiat had, only hours earlier, pledged to stand by an existing turnaround programme, saying it had already helped narrow operating losses and cut debts. Dealers told Reuters that upbeat statement helped support Fiat shares on Monday.
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By GlobalDataReuters said that Italian newspapers reported over the weekend that Colaninno was aiming to be CEO and that he would have a Fiat shareholding of 15 to 20%, equal to the Agnelli family who now hold around 30% and who crossed swords with Colaninno during his Telecom takeover.
The newspapers said the new plan, which Reuters noted Colaninno has yet to detail or to present to Fiat, involves a two-billion-euro recapitalisation of Fiat and an injection of eight billion euros into loss-making core unit Fiat Auto.
“If there is an injection of new cash, then that is a positive. But in the longer term Fiat’s real challenge is to make new and more attractive cars,” said Giulio Brunetta, head of trading at fund manager Alpe Adria Gestioni SIM told Reuters on Friday.
Colaninno would provide for an Italian solution ensuring Fiat’s historic car making business — and brands such as Alfa Romeo and Lancia — remains in Italian hands, the papers said, according to Reuters.
By contrast, Reuters noted, under the Agnellis’ longstanding strategy, Fiat has an option from next year to sell its 80% stake in Fiat Auto to partner General Motors which already holds 20% of the unit.
Colaninno’s plan foresees GM investing around 1.5 billion euros in Fiat, which in return would scrap the put option, Il Sole 24 Ore reported, Reuters said.
Colaninno’s plan responds to mounting political pressure to keep Fiat in Italian hands, Reuters said, noting that prime Minister Silvio Berlusconi, who met the entrepreneur in December, has said he wants the country’s biggest private sector employer to stay Italian.
But Fiat’s creditor banks, who are believed to favour the GM option as a better safeguard for their finances, have a key say in the company’s future, Reuters said.
Reuters said the banks are also said to be wary of the businessman’s ties to investment bank Mediobanca — Colaninno sits on Mediobanca’s board — which outmanoeuvered them to gain a stake in sports car maker Ferrari.
A banking source told Reuters the banks are due to meet on Wednesday to discuss Fiat.
Analysts told the news agency that, while Colaninno’s plan may have political appeal, from a financial standpoint it might not compensate for the loss of Fiat’s ability to sell the car arm to GM.
