Fiat Tries to Get the Chrysler Deal Done
By Brendan Moore
The clock is ticking down to April 30, the government’s deadline for Chrysler to craft some sort of partnership with Fiat, and no one can say that Fiat isn’t doing it’s best to get the deal done. Of course, they want the deal on their terms, but they are trying to get it all wrapped up before the government’s drop-dead date.
Sergio Marchionne, the CEO of Fiat, is in the US again, with visits scheduled to Detroit and Washington, D.C.
There are, however, problems.
The autoworkers unions in the both the US and Canada are resisting making any more concessions, concessions that Fiat says it needs for any merger with Chrysler to work.
Chrysler’s creditors are balking at the haircut Chrysler, Fiat and the federal government wants them to take and have instead proposed their own more creditor-friendly terms which are very different than the ones initially proposed.
These are not minor problems, and either one of them could easily derail any deal. On the other side of the ocean, though, everyone seems pretty happy. From Europe’s point of view, the Fiat-Chrysler seems to be a foregone conclusion, and Fiat’s stock has climbed upward as a result. The unconfirmed report in Automotive News last week that Fiat would also do a deal with GM’s Latin American and European arms also pushed the stock up. Italian politicians have lined up behind the deal, and so have the Italian unions, since they believe access to the American market will result in more Fiat Group cars being sold, which in turn means the Italians have to build more cars.
Prime Minister Silvio Berlusconi has publicly stated that he is in favor of the deal and Miniister of Industry, Claudio Scajola, stated at a press conference last week that a Fiat-Chrysler deal “would benefit the entire Italian industrial system.”
All is not rosy in Italy, though, as Fiat is expected to post poor first-quarter trading results, with a loss of approximately $142 million USD. The company has been profitable every quarter since 2005. Fiat’s first-quarter performance is not expected to affect the proposed deal for Chrysler in any way.
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