Fiat Chrysler Merger

[Plex]

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).

Worldcarfans

[Plex]

Fiat may partner with GM overseas

While Fiat and Chrysler are desperately trying to secure an alliance here in the United States, the Italian side of the duo is also reportedly considering an alliance with General Motors' core operations in Europe and Latin America. If all goes ahead, a merged Fiat and Chrysler, along with the GM operations, would become the world's second-largest auto group.

The latest information comes from a source familiar with the matter, who revealed to Automotive News that talks between Fiat and GM are in the early phase and are not an alternative to Fiat's ongoing negotiations with Chrysler. The GM operations involved would include the Opel and Vauxhall brands in Europe and GM Latin America in South America. Not included is Saab and Chevrolet's European operations.

A revised restructuring plan laid out by GM CEO Fritz Henderson on Friday revealed plans to change the Opel and Vauxhall brands into a separate unit, while also acquiring a new investor involved. Henderson also revealed that there are a total of six investors keen on the Opel and Vauxhall brands but stated they were �financial and industrial players.�

This means that Fiat is unlikely to acquire a stake in GM�s European operations anytime soon but there may still be the possibility of a revival of GM and Fiat�s deal from nine years ago, which saw GM acquire 20% of Fiat and the two companies combine their European and Latin American purchasing and powertrain operations, as well as jointly develop a compact car platform.

Motorauthority

[Plex]

Obama gives green light to Fiat-Chrysler alliance

Bankruptcy is the word of the day for Chrysler, but 'merger' will soon be replacing it. The whole bankruptcy process is being pushed forward quickly to eliminate the remaining obstacles between Chrysler's viability and the Fiat merger. President Obama's speech today reflected this path, confirming both that bankruptcy is the only way forward, and that his task force finds a joined Fiat-Chrysler alliance to be viable.

"Over the past month, seemingly insurmountable obstacles have been overcome," the President said during his speech. "Chrysler and Fiat have formed a partnership that has a strong chance of success."

The combination of Fiat's alliance and a speedy bankruptcy mean that production won't be interrupted, nor will sales. Even warranty service will go forward, complete with a guarantee by the U.S. government. The Treasury will also be lending Chrysler an additional $7.5 billion to help it negotiate the waters of bankruptcy.

Between $3-$3.5 billion will come in the form of 'debtor-in-possesion' (DIP) financing, and another $4.5 billion will come as 'exit financing' to enable Chrysler to continue operation post-bankruptcy. Fiat will only be able to take control of Chrysler after the $7.5-$8 billion in loans have been repaid.

Part of the plan includes new government capital for GMAC, which has agreed to finance new Chrysler vehicles. The Small Business Administration will also be expanding its loans process to help industry suppliers remain afloat, keeping cars coming and making it easier for Americans to buy cars.

The Fiat-Chrysler alliance is thought to be worth more than $10 billion for the struggling Detroit company and could potentially save more than 5,000 North American manufacturing jobs. As CEO Bob Nardelli described it in an email earlier this month, the value of the deal is �equal to or greater than the total amount of loans" that Chrysler is seeking from Congress.

"This partnership transforms Chrysler into a vibrant new company with a wealth of strategic advantages,� said Nardelli. �It enables us to better serve our customers and dealers with a broader and more competitive line-up of environmentally friendly, fuel-efficient high-quality vehicles. Benefits to the new company include access to exciting products that complement our current portfolio, technology cooperation and stronger global distribution."

Fiat's Sergio Marchionne was equally optimistic. "Our work is just beginning, but together with our new partners at Chrysler we look forward to delivering on the vast potential this alliance holds and reintroducing to North American customers of some of our most popular brands, including Alfa Romeo and the award-winning Cinquecento."

Fiat will initially hold a 20% ownership stake in Chrysler. Fiat will have the right to increase its ownership stake an additional 15% in three increments as it meets the following criteria: 5% for bringing a 40mpg vehicle platform to Chrysler to be produced in the U.S.; 5% for providing a fuel-efficient engine family to be produced in the U.S. for use in Chrysler vehicles; and 5% for providing Chrysler access to its vast global distribution network to facilitate the export of Chrysler vehicles.

"To be sure, there will be many changes as we move forward to implement our plans," said Nardelli. "But today, from many great parts, we begin to build a vibrant new company with less debt, a stronger balance sheet, richer product portfolio, supported by a well-positioned finance company.�

Motorauthority

[Plex]

Fiat to Merge with GM Europe & Chrysler to Create New Automotive Superpower

Company would buy Saab, Opel, and Vauxhall

Just days after agreeing to take a 20 percent stake in Chrysler, Fiat is expected to announce plans to purchase GM Europe's core brands of Opel, Vauxhall, and Saab. While we have heard rumors of Fiat's desire for Opel in the past, this is the first time that the company has officially confirmed their interest in acquiring GM's European brands.

If such a move were to take place, Fiat would likely spin its self off to create a new company which would include Fiat, Lancia, Alfa Romeo, Chrysler, Saab, Opel and Vauxhall. The proposed company would become the world's second largest automaker by selling 6-7 million vehicles a year and posting annual revenues of nearly 80 billion euros ($106 billion).

In an interview with the Financial Times, Fiat's Sergio Marchionne said "From an engineering and industrial point of view, this is a marriage made in heaven." He went on to say that Fiat and Opel could save nearly a billion euros a year by sharing platforms and technology. If everything goes according to plan, Marchionne believes that the transaction could be completed by the end of month.

Fiat will likely face fierce opposition from labor unions in Germany and Italy as both countries are expected to lose jobs as a result of the merger. While it's unlikely that the unions could prevent Fiat from buying GM Europe, the delay could allow rival bidder Magna International time to submit a higher counter offer for Opel.

Worldcarfans

[Plex]

Fiat CEO Sergio Marchionne to head Chrysler after restructuring

Less than a week out from the announcement of a global strategic alliance between Fiat and Chrysler comes news today that Sergio Marchionne will play the role of CEO for both carmakers. It was thought that Fiat, together with President Obama�s auto industry task force, would pick a new board of directors for Chrysler, which would then pick a new chief, but a spokesman for Fiat has revealed today that Marchionne will take the top job.

"Marchionne will be the new chief executive of Chrysler after the procedure," a Fiat spokesman revealed to the Associated Press, referring to bankruptcy protection for Chrysler and clearance by a U.S. courts for a rescue by Fiat to go ahead. In this way, Marchionne will play a similar role to Renault-Nissan boss Carlos Ghosn as the CEO of both carmakers.

Other issues that still need to be settled, however, include who would be placed on a new Chrysler board of directors. Previous reports have suggested that there are plans to include board members from Chrysler, Fiat and even the auto industry task force.

Problems that could get in the way involve the complex ownership situation affecting Chrysler, with Chrysler's debtholders and the UAW involved in difficult negotiations on how to administer the company.

Motorauthority

[MG Man]

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