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Friday, May 29, 2009
Fiat to German Government: Are you verrückt?
FIAT REAFFIRMS ITS INTEREST IN PURSUING A TRANSACTION WITH GENERAL MOTORS REGARDING THE POSSIBLE MERGER OF ITS AUTO BUSINESS WITH OPEL
Fiat reaffirms its determination in pursuing its strategic objectives of participating in the consolidation of the auto sector in Europe, and views the potential merger with Opel as an excellent means of creating the second largest car maker in Europe with a global geographic footprint and all the technological, managerial and financial resources required to successfully compete in the current market environment. Fiat’s proposed plan will limit the social costs of the integration process, while delivering at the same time significant synergies derived from the sharing of platforms, related components and power-trains.
"The search for a partner for Opel which has been initiated by General Motors, and which has involved the German government due to the request for financial assistance, has been a complicated and uneven process," said Sergio Marchionne, Chief Executive Officer of Fiat S.p.A. "We have been involved in these activities for a number of weeks now, and have tried to follow in a responsible manner the requests made by the various parties involved in the selection process. The issues that emerged from the last round of negotiations on Tuesday and Wednesday have left us perplexed, since we had not been advised until then of certain key financial factors and data which we consider to be essential to the formulation of a proper merger offer. Given the nature of the process itself and its short duration, Fiat has been unable to have full access to the financial records of Opel to determine its precise financial condition and thus properly frame a merger proposal that would be fair to General Motors as the seller and to Fiat S.p.A."
"The last round of requests which would require Fiat, among other things, to fund Opel on an emergency basis while the German government determines the exact timing and conditions of the interim financing, would expose Fiat to unnecessary and unwarranted risks. It is in fact unreasonable to expect, on the basis of prudent business judgment and proper governance of its affairs, that Fiat would provide funds to an organization whose financial details and position remain unknown to date. The brevity of time between the request and the date that the commitment must be made is such that proper due diligence cannot be performed."
"We remain committed to finding ways to bridge the expectations of both General Motors and the German government," continued Sergio Marchionne, "but the emergency nature of the situation cannot put Fiat in a position to take on extravagant risks. We have already offered to contribute our auto business assets to the merger on a debt-free basis and thus provide substantial, and absolutely necessary equity to the merger, but also the related cash-flow stream which will help stabilize the performance of the combined entities during the integration and restructuring process. More cannot be asked."
On the basis of the above considerations, Fiat S.p.A. has decided not to attend the meeting tentatively scheduled by the German government in Berlin on Friday, May 29th that has as its sole topic the emergency funding of Opel. It remains open and committed to continue discussions with all parties involved with a view to find a stable and lasting solution for the industrial activities of Opel.
TURIN, May 29, 2009