Fiat and GM have yet to come to an agreement on whether or not GM will buy Fiat’s car division.
Fiat Auto is one of the largest employers in Italy and many hope that the agreement is still possible.
An article at GrandPrix.com says:
“There was talk that GM would pay out as much as $2.4bn in cash to get rid of the put option that it signed in 2000. But these rumours were wrong and GM spokesmen continue to stress that GM believes that the put option was invalidated when Fiat Auto sold its customer credit division to pay debts. Both companies are free to take the case to court and the pressure is on the main Fiat company because it needs to radically improve its balance sheet to meet debt repayments in the future. GM does not want to pay up because the loss will have a negative effect on its earnings in 2005.
Even if Fiat does do a deal with a GM it is still facing the need for more cash and will probably have to sell one or more of its divisions and take on new debts. The sale of truck division Iveco is one option and the Lancia brand is also being mentioned as a possible target for a sell-off.”
If Fiat were to become a GM subsidiary there would most likely be a large amount of job cuts and union problems in cost reduction efforts.
murdok | Breaking eBusiness News
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