US senator pushes for Chrysler-Fiat merger
21 February 2009
The US government should consider a proposed merger between Chrysler LLC and Italy's Fiat SpA if it is the only way for the distressed Detroit automaker to survive, a senator said on Thursday.
Bob Corker, a Tennessee Republican, said there is little hope that Chrysler could remain a stand-alone company, despite its contention that it could with additional government capital, and those advocating consolidation should realise that a tie-up might involve foreign ownership.
The government would have to approve any merger. There have been few details of the proposal, which was announced last month. Corker said he has met with Fiat representatives to discuss the plan in which Fiat would take a 35 per cent stake in Chrysler in exchange for access to technology and overseas markets. (See: Fiat in technology for stock swap deal with Chrysler)
Chrysler is 80 per cent-owned by Cerberus Capital Management. Chrysler submitted restructuring plans with the Obama administration on Tuesday, showing how it would survive as a stand-alone entity. The automaker also repeated it was pursuing an alliance with Fiat as long as it could be made viable, but provided little detail.
Chrysler sought $5 billion in new government aid in its restructuring plan after receiving $4 billion in bailout funds in December. (See: GM, Chrysler demand $22 billion more; to slash jobs, production lines)
Corker also favours congressional hearings on the Chrysler turnaround proposal and a similar one, also submitted on Tuesday, by General Motors Corp. GM is seeking $16.4 billion in government loans on top of $13.4 billion approved in December. Chrysler posted an $8 billion net loss in 2008, according to their restructuring plan.
Still, the automaker is contemplating a Fiat alliance that would give Chrysler international access and Fiat access to the North American market. In its restructuring plan, it has also stated that it believes a partnership with General Motors Corp. is still the "best option for the US auto industry."