Italy's Fiat SpA is stepping up its plan to acquire a majority stake in General Motors Corp's German unit Opel, the next phase of its ambitious agenda to forge a three-way alliance between Fiat, Chrysler and Opel to create an automotive giant second only to Japan's Toyota in terms of production.
Fiat's chief executive Sergio Marchionne is meeting German government ministers on Monday to discuss a bid for Opel. Marchionne signed a partnership with Chrysler LLC in Washington last week.
Fiat's board of directors met on Sunday and authorised Marchionne to seek a potential merger between Fiat and GM's European operations, including German unit Opel and UK unit Vauxhall, according to a statement issued by Fiat on Sunday. If a deal is reached, Fiat will consider creating a new publicly traded company that combines the auto maker's car unit, Fiat Group Automobiles, with GM's European operations, the statement said. The three-way alliance is expected to generate €80 billion ($105.84 billion) in revenue a year.
Marchionne will ''over the next few weeks'' assess the viability of a combination and a new company, the board of the Turin-based carmaker said in a statement late last week. GM has clarified that it is open to offers for the Opel division, which is running out of cash and seeking 3.3 billion euros ($4.4 billion) in German government aid.
A spinoff of Fiat Automobile, which made up 45 percent of Fiat's 2008 sales, would leave Italy's largest manufacturer with assets such as the CNH Global NV agricultural and construction- equipment unit, and Iveco trucks.
Marchionne said last week he regards Opel as an ''ideal partner'' and would concentrate on buying that arm of Detroit- based General Motors after the Chrysler agreement. A combined company would have 80 billion euros in annual sales, the board said.
''The group would evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with the activities of General Motors Europe,'' the board's statement said.
Another potential investor is Magna International Inc, North America's largest auto-parts maker. Marchionne is scheduled to present Fiat's plan for Opel to German economy minister Karl-Theodor zu Guttenberg at a meeting in Berlin on Monday. Magna last week held talks with German officials about a purchase of Opel. Magna and carmaker OAO GAZ, owned by Russian billionaire Oleg Deripaska, are interested in taking over the bulk of GM's European unit, according to a Bloomberg report.
Bidders for Opel will meet with GM this week to seek clarity over financial data before each presenting an ''industrial plan,'' Guttenberg had said late last month.
GM and Chrysler have been kept afloat with US government aid. As part of the deal for Chrysler to seek court protection and begin handing over the reins to Fiat, the US automaker will get $3.5 billion in operating loans from the government. Fiat has agreed to make engines and cars in the US.
Fiat will start with 20 per cent of the new Chrysler, and gain another 15 per cent if it hits three goals: providing international distribution for Chrysler vehicles, building a car that gets 40 miles per US gallon, and making a new fuel-efficient engine at a US plant. The Italian manufacturer can then buy an additional 16 per cent when government loans are repaid.
Fiat sold 2.15 million units last year, and adding Chrysler would lift the total toward four million. GM last year achieved sales of 1.5 million cars at Opel, which includes UK's famous Vauxhall brand. Other GM Europe operations include Saab Automobile in Sweden.