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So Fiat Group wants to take a 20% stake in Chrysler and they want to buy Vauhall/Opel off GM. To raise the money to do this, they want to sell Fiat Auto (and Alfa Romeo, presumably). So who will buy Fiat Auto? My guess is still Peugeot!!
Edited by Sofa Spud on 04/05/2009 at 15:22
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Err it is a while since I did an A level in Business Studies and even that belonged to Walt Disney but is probably as you say. A holding company owns FIAT (forget its name) and Alfa etc, they have bought 20% of Chysler for virtualy nothing but then now want Opel so they have to sell their FIAT part of the business to fund it. It makes sense if you think of the company as a holding company and not FIAT as a brand or car maker.
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As I understand it (and Im no business analyst either!) they FIAT (IFIL is the holding company IIRC), will spin Fiat Group Automobiles into the new company. I then presume IFIL will hold a controling stake in this new (massive) company. They will be 2nd only to Toyota in annual production. I can't see the Germans liking the Fiat takeover though.
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I don't expect to be able to understand it in detail. In any case the detail won't be generally available. It may seem to be, but it won't be.
I see this as another paroxysm in the churning guts of the global car industry, in effect a single cartel in which everyone owns a piece of everyone else, and is owned in their turn. It will lead to a new, more complicated chart for people to bang their heads against.
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There are two ways to survive in car manufacturing these days. Small and niche (Morgan, Lotus etc) or huge (Toyota, VW etc). Fiat recognise that they are too small to survive long term in a world that will end up with perhaps five big manufacturers. They need to buy or be bought eventually and car makers are dirt cheap at the moment.
Edited by nick on 04/05/2009 at 18:04
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So the nearly bust Fiat buy the bust Opel and Chrysler. Will it be called Italian Leyland?
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" Will it be called Italian Leyland? "
No, it'll be called LeyandII, after the popular hedging..
Edited by oldnotbold on 04/05/2009 at 18:52
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In the last couple of years Fiat has had consecutive record profits. In 2008 the group made e3.4 billion
www.autoebid.co.uk/autoenews/newsAEBSingle.php?art...9
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I understand the new enterprise will be called FISLER (sorry, I'll get my coat)
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>>No, it'll be called LeyandII
We,, if it grows half as well as leylandii, it will be a force to be reckoned with.
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I can't see the Germans liking the Fiat takeover though.
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No, the Germans get very protectionist (nationalist?) when any takeover by a foreign company is mooted, whatever lip service they might pay to free trade. Unless they are desperate indeed they might try to block it. Though of course Opel (like Vauxhall) is really an American company. Incidentally, I can't see the name Vauxhall surviving long after such a takeover.
Just a short while back FIAT was in a bad way financially but recently have turned it round . However I can't help but think that Chrysler AND GM Europe might be a bit of a stretch, but if little minnow Porsche could swallow a giant fish like VW......
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"Fiat/Chrysler/GM - does anyone understand it?"
You need to be into high finance (which I'm not) to understand big business deals like this. I'm sure they know what they're doing.
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>>I'm sure they know what they're doing.
I don't share your faith. Consider Mercedes/Chrysler a decade or so ago, the Ford 'luxury car' division - JLR, Aston Martin etc, the various calamitous bank mergers/acquisitions, the dotcom debacle etc. - the list is endless.
No, often mergers & acquisitions are based on flimsy projections, unrealistic expectations & empire building megalomania. There's a very neat encapsulation of this syndrome which refers to dogs cleaning parts of their generative organs.
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Takeovers of companies with different cultures need time, management and money to be successful.
Minority shareholding without power to change things are a waste of time.
With car makers, a decade is needed to change due to model cycles, etc.
Since FIAT took 20 years plus to get their own products right, I would not be over optimistic.
Two takeovers? GM Europe and Chrysler? recipe for disaster imo.
Edited by madf on 05/05/2009 at 12:05
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To put this in perspective, in 1998 Daimler paid $36 billion for Chrysler. In 2007 Cerebus paid Daimler $7.4 billion dollars for 80.1% of Chrysler.
In this transaction Fiat are taking 20% of Chrysler (rising to 35%, maybe) for free. Cerebus get nothing, Daimler get nothing more.
It may be risky, but for Fiat this is the bargain of the century.
If they can keep the price down for GM Europe, then they're laughing. Unlike Cerebus or Daimler who have both lost sheds loads on Chrysler now. And GM is losing GM Europe at the worst time to sell too.
And let's not forgot how GM already had to pay Fiat $2 billion to get out of a "on-paper" merger with them, and that was after already paying Fiat $2.5 billion+ 5.1% of GM shares in exchange for 20% of Fiat shares...
No doubt some of the $2bn pay-off is being used to buy GM Europe...how ironic!
Fiat really are on a lucky streak right now. I don't really see how they can go too far wrong with this. There's bad mergers and good mergers, these two I believe will be the latter for Fiat, even if Fiat end up ditching Chrysler in the long run.
Edited by TheOilBurner on 05/05/2009 at 12:53
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Now the talk is of GM Europe being picked up for as little as $1.3 billion.
Given that GM gave Fiat $2bn so recently, it's almost like GM have actually paid Fiat to take GM Europe off their hands... :)
And to think GM Europe is probably the only part of the business that really makes money, apart from GMAC, of course.
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GM Europe allegedly need $3Billion to keep going and I don't think Fiat have it. Any guesses where Fiat hope it's coming from?
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GM Europe allegedly need $3Billion to keep going and I don't think Fiat have it. Any guesses where Fiat hope it's coming from?
My guess is it`s coming from the German and American taxpayer.They are almost getting these two firms for bargain basement prices.
What puzzles me though is why VAG or PSA or some Japanese company are not bidding. Why have Fiat got it all their own way?
As a long time Fiat fan,I wish them well.
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What puzzles me though is why VAG or PSA or some Japanese company are not bidding. Why have Fiat got it all their own way?
VAG have their own (little reported) problems. The Japanese firms believe in natural expansion of their own products by improvement rather than takeovers (although Toyota buy other Japanese firms). Rover could have been a big success if it wasn't for this policy as Honda would have made them very successful, rather BMW bought them instead and didn't undertand the market they were good at (which was small cars like the metro and 200).
Fiat already share a great deal with GM europe, engines, a platform and they need to expand. GM Europes cars are also ready for the USA market, sold under the disappearing Saturn brand.
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i like the idea
you taka the car or i smasha your face could be the new corsa advert
or free pizza for a year with every astra
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The deal now looking a whole lot better with Obama announcing new targets for emissions. They want an average of 35mpg across a companies fleet. With Fiat powertrains they have a good "platform" for success
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Not so long ago people on this site were dismissing Fiat as an unimportant manufacturer with hopeless products which had no place in the modern car industry.
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Alanovich, they still will. People tend to hang on to their prejudices until an avalanche of contrary evidence can no longer be ignored. Then they quietly drop the subject and look for another to pontificate on. I'm probably as guilty as most.
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