An option allowing Fiat to force GM to buy the remaining 80% of its Fiat Auto carmaking unit has been put back a year while the two groups settle a disagreement over whether it is still valid.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Fiat and GM jointly announced an agreement that shifts the put period by one year, from January 24, 2004 to July 24, 2009 of the Master Agreement, to January 24, 2005 to July 24, 2010. They also said a second agreement precludes the parties from initiating legal proceedings relating to the Master Agreement until December 15, 2004, while preserving their respective rights.
The joint statement also said that ‘General Motors and Fiat continue to believe that the joint ventures between Fiat Auto and General Motors are working well, generating synergies, and that both parties would like to see expanded cooperation’.
General Motors has alleged that the sale of certain assets of the financing business of Fiat Auto and the capital increase of Fiat Auto Holdings, carried out by Fiat, constitute breaches of the Master Agreement entitling General Motors to terminate the Master Agreement and with it the put option.
Fiat said that it contends that both of these transactions were wholly proper and did not violate the Master Agreement or any of General Motors’ rights. Fiat regards the put option as effective and exercisable in accordance with the provisions of the Master Agreement.
The statement added that the agreements have been executed in the context of ongoing discussions between Fiat and General Motors regarding the re-defining of the structure of the strategic alliance in order to permit their industrial cooperation to continue constructively and resolve both parties’ concerns.
