General Motors Corp., the world's largest
automaker, is taking a 20 percent stake in Italy's Fiat SPA in
exchange for $2.4 billion in stock equivalent to 5.1 percent of
The partnership announced today was expected to open up
international markets for both automakers.
In a statement, the companies said the partnership would focus
on Europe and Latin America. They expect annual savings to reach $2
billion within the next five years.
The deal covers Fiat's Alfa Romeo and Lancia brands. It does not
include Fiat's other companies, Ferrari and Maserati. The deal will
include joint ventures in purchasing, engine development and auto
As part of the agreement, the Detroit-based GM has the first
right to bid on the rest of Fiat Auto if Fiat decides to sell in
The deal is subject to approval by U.S. and European Union
The alliance has already received the blessing of the country's
major union confederation, CGIL.
CGIL's leader, Sergio Cofferati, told the Rome daily La
Repubblica that the reported deal would be "a turning point which
is good for the Italian economy."
Fiat, the world's seventh largest automaker and Italy's largest
private employer, has seen sales slip over recent years, and there
has been speculation that it would be acquired or merge with a
non-Italian partner like GM or Germany's DaimlerChrsyler AG.
Its share of the Italian market, once 60 percent, has dwindled
to 39 percent as competition eroded its dominance. In 1998, Fiat
claimed only 11 percent of car sales in Western Europe.
Fiat is controlled by the Agnelli family, but Gianni Agnelli,
Fiat's honorary chairman, recently acknowledged that the company,
which makes Alfa Romeo, Maserati and Ferrari sports cars, was on
the lookout for international partners.
Shares of GM were trading at $77.25, down 56 1/4 cents, in late
morning trading on the New York Stock Exchange. U.S. shares of Fiat
had not started trading, but closed Friday at $34.87 1/2.