The head of Italy's Fiat has outlined an "interesting" plan to create Europe's biggest car maker but will need 5-7 billion euros in financial support from governments, Germany's economy minister said. Sergio Marchionne met with senior officials in Berlin on Monday to present his ambitious vision of combining Fiat's car business with General Motors' European operations and Chrysler, with whom he sealed a partnership deal last week.
"It is an interesting approach, without question," Economy Minister Karl-Theodor zu Guttenberg told reporters after meeting Marchionne. He said the German government, which is keen to save jobs at GM's Opel unit ahead of a September election, would look at the details of the plan and also consider other options. All Opel's final assembly plants in Germany would be safe under Marchionne's plan, said Guttenberg, but an engines and parts factory in Kaiserslautern, in western Germany, may be hit.
Opel employs about 25,000 people in Germany and also has plants in Spain, Belgium and Britain. Guttenberg said Fiat was not planning on taking on new debt but that it would require some 5-7 billion euros in bridge-financing and was seeking state guarantees from around Europe. Previously, Opel had said it required 3.3 billion euros ($4.37 billion) in state guarantees.
German Chancellor Angela Merkel has said she is open to guarantees but has made clear a decision will depend on the feasibility of Opel's plans and on its finding a partner. If Marchionne's plan is realised, the combined group would be the world's second-biggest automaker with sales of about 6-7 million vehicles a year and 80 billion euros in revenues. Fiat's shares were up 7.3 percent in Milan at about 1348 GMT while the DJ Stoxx European auto sector was up 0.9 percent.
"The auto group spin-off has always been an option prized by the market as it brings out the stand-alone value of the auto business without the built-in discount that comes from a conglomerate like Fiat," said Serge Escude, an analyst with Cassa Lombarda.
Comments
Comments are closed.