According to Reuters, “Fiat will not exercise an option to sell its car unit to General Motors for at least another nine days.
This will give groups more time to settle a spat over its validity, the Italian group said on Monday.”
Forbes wrote, “Fiat made the announcement on the day mediation over its “put option” – through which Fiat has the right to sell its car business to GM – was due to end.
Fiat said in a statement that it had put back the date “to wait for the conclusion of the process of mediation.” The company said the put option is “an important instrument for Fiat, and is valid and can be exercised according to the terms agreed.””
MarketWatch added details …
“Under an agreement in 2000, Fiat has the option of selling its Fiat Auto unit to GM, which GM has made clear it is not interested in taking on, particularly as it’s engaging in restructuring its European subsidiary Opel.
GM bought 20 percent of Fiat Auto that year, though its stake has since been diluted to 10 percent.
GM last week wrote-down its investment in Fiat Auto, taking a $220 million charge.
The crux of the issue is whether the put option is mandatory or not.
GM says that Fiat has broken its agreement, while Fiat disagrees.
“Fiat has reaffirmed its views that it does not consider the sale of certain financial activities of Fiat Auto and the recapitalization of Fiat Auto to be violations of the master agreement, and as such that the put option it holds on its Auto business is an important asset for Fiat, and is valid and enforceable in accordance with its terms,” the company said in a statement on Monday.
GM in its more terse statement didn’t detail the alleged Fiat violations.”
Murdok | Breaking eBusiness News
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