FINANCE: Chrysler to be taken over by Fiat?

[Archangel]

..and not consensus (lulz)

Originally Posted by FT.com

Chrysler and Fiat in joint venture talks

By Julie MacIntosh in New York and Vincent Boland in Milan

Published: January 19 2009 18:20 | Last updated: January 20 2009 08:02

Chrysler and Fiat are in talks about creating a joint venture that would give the Italian carmaker a significant stake in Chrysler , several people close to the matter said on Monday.

One person involved in the talks said the companies had signed a memorandum of understanding on a deal to give Fiat a 35 per cent stake in Chrysler and an option to buy a majority of the company. The person said the deal could be announced within days.

But other people close to the matter said terms of the deal were still being negotiated. Fiat declined to comment. Chrysler said it would “not confirm or disclose the nature of its private business meetings”.

Shares in Fiat were suspended on Tuesday pending a statement from the company, the stock exchange in Milan said.

Under the proposal being considered, Fiat would help to finance the retooling of some Chrysler factories so they could manufacture Fiat cars and components and give Chrysler access to its technology. Fiat would not inject any cash into Chrysler.

The federal government gave Chrysler – smallest of the Big Three carmakers – a $4bn emergency loan this month to avert a collapse of the company.

As part of the bail-out – through which the government also promised General Motors $13.4bn – both US companies must restructure their operations and prove their viability by March 31. Fiat, which has been looking for partners in North America, has also held talks with Ford about a tie-up.

A Chrysler-Fiat link would be similar to the venture between Japan’s Nissan and France’s Renault, which have built vehicle assembly plants together.

A Chrysler-Fiat combination would have a strong presence in North and South America and in Europe. Chrysler lost much of its capability in Europe when its unsuccessful merger with Germany’s Daimler fell apart.

Linkery.

[Morfin]

Fucking Italians: Always copying the Germans.

[Archangel]

Platform sharing could be interesting. Fiat doesn't build any saloon cars, but they own Alfa and Lancia, which most certainly do; just as the current Chrysler 300 is quite successful due to its W210 E-Class underpinnings, sharing a layout with the 169 might not be a bad idea. Also, those Italian JTD and TS engines are pretty clean burning, so using them might make Chrysler look good, environment wise...

[TylerDurden]

luca di montezemolo is a brilliant businessman, and chairman of fiat. he almost single-handedly brought ferrari back from an almost certain grave in the mid-nineties. i'd like to see this happen. i think it's exactly what's needed.

[Archangel]

I thought Sergio Marchionne was CEO...

[redsox39]

Whoo Hoo! Now I can say my Sebring is a European Car to all my snobby relatives!

[Archangel]

Yeah, but then, Fiat ain't exactly Bentley (which is owned by another small car manufacturer, though).

[TylerDurden]

Originally Posted by Archangel

I thought Sergio Marchionne was CEO...

he is, but you don't think ol' luca doesn't have his hand up those trousers?

[Archangel]

I just checked his profile, and damn, Luca is bloody everywhere...

[TylerDurden]

Originally Posted by Archangel

I just checked his profile, and damn, Luca is bloody everywhere...

that's the kind of guy i'd want to run my company if i was struggling and on the verge of bankruptcy. he hasn't gotten to where he is by his looks, although he does give trump a run for his money.

[Pax Britannia]

Fix
It
Again
Tony

[Hoser]

Originally Posted by redsox39

Whoo Hoo! Now I can say my Sebring is a European Car to all my snobby relatives!

Sadly your car wasn't built under Fiat, so no.

[taters]

Chrysler has been slowly dying since the 80s. Im surprised they arent completly going under at this point.

[Archangel]

It's funny: With all the European disdain for American SUVs, Jeeps have always been selling pretty well here.

[BIG PIZZLE]

Real news in the news section? Who would have thought.

[Claydon]

does this mean chrysler might ACTUALLY produce something with a bit of style?

or am i dreaming?

[TylerDurden]

you might be dreaming

Jan. 21 (Bloomberg) -- Fiat SpA dropped to the lowest level in 24 years in Milan trading on concern that an alliance with Chrysler LLC will jeopardize the turnaround that’s made the Italian company one of Europe’s best-performing carmakers.

Fiat fell as much as 4.8 percent to 4.21 euros, the lowest since at least Jan. 2, 1985, and was priced at 4.41 euros as of 3:11 p.m. local time. The Turin-based company lost 1.3 percent yesterday after earlier jumping 6 percent on news that it had agreed to take a 35 percent holding in Chrysler.

Chief Executive Officer Sergio Marchionne extended Fiat’s profit margin to 5.5 percent last year while boosting sales 13 percent after revamping the top-selling Punto and reviving the 500 minicar. While Italy’s largest automaker will hand over no cash for the Chrysler stake, analysts say the pact may increase costs and saddle it with a share of the U.S. company’s losses.

“Terms of the alliance imply some ‘option’ value but minimal operating benefits,” said Philippe Houchois, a London-based analyst at UBS AG, which is advising Fiat on the Chrysler partnership. Houchois reiterated his “neutral” rating and cut his price target to 5.1 euros from 6.5 euros.

Fiat has declined 4 percent this year, reducing the company’s market value to 5.3 billion euros ($6.9 billion).

Taking a stake in Chrysler may mean Fiat books losses from the Auburn Hills, Michigan-based company with no immediate reward, Natixis Securities analyst Georges Dieng said in a note, reiterating a “reduce” rating.

The tie-up with Chrysler might also run up costs and prove a distraction for management, London-based Morgan Stanley analyst Adam Jonas said. Bayerische Motoren Werke AG, the largest maker of luxury cars, said today it wants to continue talks about sharing parts with Fiat.

Marchionne Turnaround

CEO Marchionne ended four years of losses in 2005 after adding models and scaling back spending. The biggest slump in Italy’s car market since 1993 is now forcing him to consider cutting financial goals and Fiat may tomorrow report a 73 percent drop in fourth-quarter net income to 157 million euros, according to a Bloomberg survey of 13 analysts.

“The initial market read is that Marchionne has struck a ‘free call option’ on Chrysler’s future, with little or no downside,” Jonas said in a note. “However, we would encourage investors to consider Fiat management’s time and attention and indirect expenditures it will likely incur.”

Joint products are unlikely to emerge before 2012 and “this could be an eternity to Chrysler, given its current financial state,” said Jonas, who rates Fiat “underweight.”

Cheuvreux analyst Marco Cristofori in Milan said that while the agreement should be generally positive for Fiat, he does not envisage any significant cost savings in the short term.

U.S. Foothold

Fiat’s stake in Chrysler will give it a foothold in the world’s biggest auto market while granting the U.S. company access to its small-car technology. The carmakers and Cerberus Capital Management LP, Chrysler’s controlling shareholder, have signed a non-binding agreement, they said yesterday.

Fiat has an option to increase its stake to as much as 55 percent, though that probably won’t happen soon, said a person familiar with the deal who asked not to be identified because the terms are confidential.

The alliance is consistent with the conditions of the U.S. Treasury’s $4 billion bailout of Chrysler, the companies said. It is also subject to Chrysler receiving another $3 billion in aid for which it can qualify by submitting a plan by Feb. 17 for a restructuring and return to profitability, the person said. Fiat will get three of seven seats on Chrysler’s board, he said.

Brands Return

Fiat will provide platforms to manufacture fuel-efficient and small cars to be produced by Chrysler. The pair will share distribution networks, allowing the Italian company to return to the U.S. with its main brands for the first time since 1995. The partnership should be completed by April.

Marco Santino, an auto industry consultant at AT Kearney in Rome, said Fiat’s goal will be to gain control of Chrysler if the risk is acceptable. Still, while the 500 may sell well in urban areas of the U.S., the suitability of other models is less clear and Fiat still needs to pursue consolidation in Europe to deal with overcapacity and shrinking volumes, he said.

BMW of Germany will continue with talks about cooperation between its Mini unit and Fiat’s Alfa Romeo brand, spokesman Marc Hassinger said today by telephone.

Nissan Motor Co., Japan’s third-largest carmaker, wants to remain an ally of Chrysler, with which it has an agreement to produce three new models, spokesman Simon Sproule said.

Debt Concern

The alliance involves a high “execution risk” for Fiat against a background of “gloomy sales” in Italy, Paris-based Societe Generale credit analyst Pierre Bergeron said in a note. Bergeron revised his recommendation on the company’s credit default swaps to “neutral” from “sell” -- indicating increased concern about Fiat’s ability to repay its debt.

Sellers of default protection on Fiat demanded fees in advance in addition to annual payments today, according to CMA Datavision prices at 11 a.m. in London. CDSs were quoted at 17 percent upfront and 5 percent a year, meaning it cost 1.7 million euros in advance and 500,000 euros a year to protect 10 million euros of Fiat bonds from default for five years. That’s versus 975,000 euros a year and nothing in advance yesterday.

linky

[Claydon]

yah, i thought i just woke up.



in other news..toyota out sells gm in total units.


go fuck yourselves GM and the UAW

[freegood]

Why do you hate America, Claydon?

[Claydon]

Originally Posted by freegood

Why do you hate America, Claydon?

I do not hate america, what I do hate is the stupidity of americans that has brought this country to economic collapse. The choices by GMs management, Chyrsler's Management and the UAW have brought themselves to the brink of bankruptcy. The choices of the stupid consumer who thought a 8 ton V8 SUV for urban transportation as being a swell idea has made me nauseated for 10 years. The choice that the average consumer made thinking that a tool shed for $600,000 with a shitty ARM while making $6/hr at McDonalds as being a viable choice is what I hate.


I <3 the US

[TylerDurden]

Originally Posted by Claydon

n other news..today is wednesday.

wut? rly? /sarcasm

to be honest i figured it'd work out this way... ford squirreled away some dough for a rainy day (it's pouring out there), so as long as one or both of the other two manufacturers don't bite the bullet they'll be okay without needing any assistance from the gov't.

chrysler needs a little suckle off the gov't dick... just enough to carry them to better days. they've probably been throwing out feelers for quite some time now, hoping to combine efforts with another company.

gm is doing the jenna-haze-nut-juggle while doing the texas two-step and chugging twenty pounds of government cock. they're spoiled meat; the plague: nobody wants 'em. at this point they're too badly damaged to recover. it could be raining pussy and gm's going to get hit with a dick.

[Morfin]

Originally Posted by Claydon

I <3 the US

But it hates you.

[Claydon]

Originally Posted by TylerDurden

wut? rly? /sarcasm

to be honest i figured it'd work out this way... ford squirreled away some dough for a rainy day (it's pouring out there), so as long as one or both of the other two manufacturers don't bite the bullet they'll be okay without needing any assistance from the gov't.

chrysler needs a little suckle off the gov't dick... just enough to carry them to better days. they've probably been throwing out feelers for quite some time now, hoping to combine efforts with another company.

gm is doing the jenna-haze-nut-juggle while doing the texas two-step and chugging twenty pounds of government cock. they're spoiled meat; the plague: nobody wants 'em. at this point they're too badly damaged to recover. it could be raining pussy and gm's going to get hit with a dick.

After seeing that 'new' buick lacrosse they are hailing as their "great come back" and the acdelco interior looks like the same shit from the early 90s I say let them die.

However, I am not a corvette fan but that is an american icon, and I would hate to see corvette go down.

[Claydon]

Originally Posted by Morfin

But it hates you.

whatever you canadian american hybrid!

BLEH!

[Morfin]

You forgot old.