GM reportedly negotiating swap for equity stake in Fiat
Four years after paying $2 billion to extricate itself from a partnership with
Fiat
,
General Motors
is seeking a stake in the Italian automaker in exchange for its Latin American and European operations.
General Motors is eager to cede control of its money-losing Opel unit in Germany. But Fiat has also expressed interest in
G.M.
’s other European operations as well as its historically profitable Latin American business, though the possible terms of such a deal have not been discussed publicly.
G.M., despite its precarious financial position, now feels it has a bargaining chip with its Latin American unit, and is negotiating with Fiat over what it might get in return.
According to two people close to the negotiations, the companies are far apart.
Sergio Marchionne
, Fiat’s chief executive, has indicated a willingness to give up less than 10 percent of Fiat to General Motors.
But G.M. executives are holding out for at least 30 percent of the Fiat Auto Group, according to these people, who said they were not authorized to comment publicly because the discussions are fluid. A Fiat representative declined to comment on whether G.M. was seeking a stake, as did a spokesman for G.M.
The discussions are the latest development in Fiat’s multipronged bid to grow, almost overnight, into a dominant global auto company, by acquiring Opel and a 20 percent stake in
Chrysler
.
On Wednesday, Fiat confirmed that Mr. Marchionne would be chief executive of Chrysler when it emerged from bankruptcy, while remaining chief executive of Fiat.
Even analysts who admire Mr. Marchionne’s stamina say they question whether combining the three companies is feasible.
“You can’t get a meeting room big enough to fit all these companies together,” said Arndt Ellinghorst, an analyst with
Credit Suisse
in London. “A person has to sleep, and unless he’s got a strong management team, there is a significant execution risk.”