[madan80]

Fiat S.p.A. and Chrysler LLC confirmed today that the Italian company intends to acquire an initial 35 percent stake in the U.S. carmaker.

In a joint statement, Fiat, Chrysler and Chrysler's majority shareholder Cerberus Capital Management L.P, said they have signed "a non-binding term sheet to establish a global strategic alliance."

The pact "would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrains, and components to be produced at Chrysler manufacturing sites," the companies said.

Under the terms of the deal, first reported on Monday by Automotive News Europe, Fiat would make available its distribution network in key growth markets. "Substantial cost savings opportunities" would be available to the alliance, the companies said.

The transaction already has the blessing of the UAW. UAW President Ron Gettelfinger said in the press release:

"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability."

PRESS RELEASE: Fiat Group, Chrysler and Cerberus Announce Plans for a Global Strategic Alliance

Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority owner of Chrysler LLC, announced today they have signed a non-binding term sheet to establish a global strategic alliance.

The alliance, to be a key element of Chrysler's viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler's submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.

The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler's restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler's long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury.

As a consideration for Fiat Group's contribution to the alliance of strategic assets, to include: product and platform sharing, including city and compact segment vehicles, to expand Chrysler's current product portfolio; technology sharing, including fuel efficient and environmentally friendly powertrain technologies; and access to additional markets, including distribution for Chrysler vehicles in markets outside of North America, Fiat would receive an initial 35 percent equity interest in Chrysler. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.

"This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefitting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved," the CEO of Fiat Group, Sergio Marchionne said.

"A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing," said Bob Nardelli, Chairman and CEO of Chrysler LLC. "This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the Government Loan. The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."

"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability," said Ron Gettelfinger, President United Auto Workers (UAW).

"We're on board with this important strategic initiative as it will help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs," said General Holiefield, Vice President, United Auto Workers (UAW).

[Steeroid]

http://www.nytimes.com/2009/01/21/bu...l?ref=business

Announcement of the Fiat-Chrysler Alliance - WSJ.com

So do we see a new Ferrari SRT10 or a Dodge Enzo?

Or will it be a Charger MJD?

[aaggoswami]

I think how will this be beneficial to Fiat except entering the US market with their own cars. US is different market as compared to Europe. Chrysler will be the one to gain the most. The Europen market that they are not able to crack since long will now be open for them through Fiat. And they will have the diesel tech from Fiat, but what about Fiat. I think that PSA would be nice combo with Fiat, but this looks like a bad match and I wonder how long both will survive.

Neither of them have a good pool of cash as compared companies like Toyota or Honda or even Suzuki for that matter. Chrysler has just barely good enough products for US, where as Fiat is good at just Europe. This was not the case with Renault-Nissan and Renault Nissan had a different leader. They both are attempting to come up, but I dont think that it will be really beneficial to either of them. May be a few diesel motors and few petrol motors give and take, at the most a minivan is all that they can exchange.

But the opportunity is still with Fiat to open a new market in US. For years now, US public is demanding the European products and this is where Fiat can step in with their super minis. Also the diesel market killed by Wagoner can be rejuvenated by Fiat. This is the brightest part of this set up. Hope Fiat capitalizes on this and increase the reliability of their cars, specially with electronics. Then the story would be different for both of them.

[aah78]

Originally Posted by madan80

An alliance with Chrysler would allow Fiat to sell Alfas and the 500 in the United States, because sharing manufacturing sites with Chrysler would bring down costs.

Alfa Romeo's already coming to the US, though they keep postponing the release and are planning to sell their cars through existing Ferrari / Maserati network. An alliance with Chrysler will save them a bunch, allowing existing dealerships to handle duties.
I'd love to see the tinny 500 in the US. It should give the MINI a decent competitor.

Originally Posted by Steeroid

So do we see a new Ferrari SRT10 or a Dodge Enzo?

Or will it be a Charger MJD?

The Ferrari SRT-10 actually sounds like a good idea. A powerful hot looking car that handles well too.

As for the rest - god forbid.

[Volt]

Think of it guys, Mr. Tata is already on the Fiat board. With LR and Jeep, this combine can rule the 4x4 world.

IMHO this deal has the potential to unlock value for both Fiat and Chrysler.

I think, very soon we will see the Chrysler Linea on US roads.


Bloomberg.com: Worldwide

Jan. 20 (Bloomberg) -- Chrysler LLC, rescued last month with $4 billion in federal loans, is trading a 35 percent stake to Italy’s Fiat SpA as the two companies work to create viable carmaking operations.

[iraghava]

Originally Posted by Volt

IMHO this deal has the potential to unlock value for both Fiat and Chrysler.

Or sink them both forever. Neither company is in a strong shape right now & if the deal doesn't work as well as hoped, it could mean curtains for both the companies.

Somehow, I think this is just Cerebrus orchestrating the deal from the background to reduce their risk factor in Chrysler. Could be wrong though.

[garychopper]

mark my words, fiat will be one of the few carmakers to get out of this recession in good shape, stronger than ever,this is a masterstroke of a move, although from facade it looks totally suicidal..

[Zenster]

Hi All, here's the news from indian new agencies:

Italian automaker Fiat has entered into a global strategic alliance with Chrysler and would receive 35 per cent stake in the ailing car manufacturer.
The alliance would also provide Chrysler that recently received four billion dollars from the Federal government, access to Fiat's fuel-efficient vehicle technologies.
"Fiat SpA, Chrysler LLC (Chrysler) and Cerberus Capital Management LP, the private investment majority owner of Chrysler LLC," would establish a "global strategic alliance", the companies said in a joint statement on Tuesday.

Source: Fiat to hold 35% stake in Chrysler

[GTO]

Originally Posted by GTO

Are they nuts? Fiat is fighting for survival as well, and has seen incredibly tough times in the recent past. Two wrongs don't make a right.

Or is Fiat eyeing a slice of that lucrative auto bailout plan?

Originally Posted by deepakhon

I do know that Chrysler owns Jeep and also their dealership network in US is pretty good,

Come to think of it, it's the easiest way for Fiat to enter the US market today. Chryslers wide distribution network!

[deepakhon]

And again, I was reading certain comments about this.

It looks like Chrysler is an LLC, and that means that Fiat will not have to foot the bill for Chrysler's liabilities.

Also, Chrysler has access to Fiat's engines, components and platforms for their cars. Fiat now has access to Chrysler's US dealership network.

Fiat has 35% share in Chrysler without paying a dime. If Chrysler is worth more in a few years, it is great for Fiat. If not, why should it bother? Fiat has not paid anything.

Fiat can also use Chrysler's factories to manufacture its 500 and Alfa Romeo range of cars in US.

If Sergio can pull off this deal, it is definitely worthwhile.

[Steeroid]

Its a brave bet, but it can swing either way:

1. Fiat is a small-car maker, Chrysler has no small cars. So they complement each other pretty well.

2. Chrysler isnt into diesels in a big way, Fiat has no large-capacity petrol engines (dont go around saying Ferrarri-Maserati, it isnt the same thing). Again, its a win-win.

3. On the other hand, both are very localized manufacturers primarily serving their home bases without a widespread international presence. One is heavily concentrated in Italy with a bit of Euro and Latin American presence, the other is heavily US-based with some Middle-east presence. I dont think the Italians are going to be buying large-capacity V8s, and I doubt if America will shift to the 1.something litre segment, so is there really a synergy?

4. A much bigger manufacturer (Daimler Benz) with more technical, manufacturing and financial strengths couldnt turn Chrysler around in the few years that they owned that company. How does Fiat hope to turn things around especially when ownership is shared with a VC?

5. Neither of these are brands with a reputation for building trouble-free vehicles in the Jap mode or extremely luxurious vehicles in the Euro mode. In most markets outside their homes, both are looked upon as makers of unreliable vehicles - I agree with GTO here that two wrongs cannot make a right. At the most, Fiat might sell some 500s in the US and Chrysler may sell limited numbers of Jeeps or Challenger/Charger types in Europe on the novelty factor.

[amit]

So when is the Chrysler 300 1.9L 140bhp JTD model coming to the states?

[Samir Taheer]

I don't think its just about Fiat selling a few 500's in America. With the Chrysler alliance it will give Fiat a better base for all their cars, including - Ferrari, Maseratti, Lancia, etc. Also lets not forget Fiat's, CNH Group - which is amongst the largest Agricultural and Construction Machinery Manufacturers. This alliance will make things alot easier for Fiat to tap into the American Market.

As part of the alliance - Fiat will get a fully tooled up production facility in America. So in exchange for some platforms - Fiat get an almost production ready facility in a new country.

As for Chrysler - GM took over Dawoo and other smaller companies, so they have access to small engine technology. Chrysler has nuthing in those terms. This gives them the opportunity to venture into markets they dont have access too. A chrysler based on the Fiat Punto platform - i think very likely.

My opinion - Its a great chance for both companies to come out on top.

[FERRO]

Has Fiat got similar deal with Tata ? I mean does it own any stake in Tata motors ? or is it the other way round,does Tata owns some stake in Fiat spa ? I think its win-win situation for Fiat, if it fails bye bye Fiat.