FIAT/CHRYSLER DEAL:ITALIAN AUTOMAKER Fiat will not walk away from its deal to buy bankrupt Chrysler, a spokesman said yesterday after a US Supreme Court order put the sale in doubt.
Both Chrysler and the Obama administration have said a long delay could kill the deal and result in Chrysler’s liquidation. Fiat can abandon the accord if it does not close by next Monday, June 15th.
Taking over Chrysler is a big part of Fiat chief executive Sergio Marchionne’s ambitious goal of vaulting Fiat, Europe’s number six automaker by unit sales, into the top ranks of world car makers.
“Fiat will not walk away from the deal if it isn’t completed by the June 15th deadline,” its spokesman said. Fiat would not comment on the US Supreme Court order until it had more information, he added.
Fiat and other car firms have been battered by an unprecedented sales crisis sparked by the global economic slowdown.
In a ruling on Monday, US Supreme Court Justice Ruth Bader Ginsburg said the bankruptcy judge’s orders allowing the Chrysler sale to Fiat were “stayed pending further order” by her or by the high court.
It was unclear what the next step would be. Many experts interpreted the action as giving the top court more time to weigh its response to a request by three Indiana pension funds and others for a stay of the deal.
Arndt Ellinghorst, an analyst with Credit Suisse, said he would be surprised if Ginsburg’s order threatened the Chrysler deal.
If it were blocked, Fiat then would have to go back to looking for potential partners in Europe, such as France’s PSA Peugeot Citroën SA, he said.
“Fiat’s bigger problem is lacking scale in Europe, not the potential entry into the US market,” he said. “The number of [merger] candidates is clearly getting smaller.”
Ginsburg’s order comes less than two weeks after Fiat lost in a bid to take over Opel, the German unit of General Motors (GM) and another key part of Fiat’s expansion plans. Germany picked car parts maker Magna International to take over Opel, but Marchionne has said Fiat is still interested in the company.
Although Germany has invited rival bidders to improve their offers for Opel, the premier of the German state of Hesse said the consortium led by Magna was still on track to buy Opel.
Klaus Franz, the head of Opel’s works council, said the company could save about €300 million a year through accords with GM and Magna on licence fees.
Recent reports have also cited sources yesterday saying three groups had entered bids for Saab, GM’s Swedish unit.
A preferred bidder is likely to be chosen by the end of this week. Swedish luxury sportscar maker Koenigsegg and Ira Rennert’s Renco Group are said to be among the suitors, along with Merco, a group of investors from the US state of Wyoming.
In another sign of flux in the motor industry, Porsche said it was in exclusive talks with the Gulf state of Qatar that could ease Porsche’s debt burden.
The Financial Timesreported the the Qatar Investment Authority could take up to 25 per cent of Porsche's holding company in a deal involving a capital increase of up to €4.5 billion.
– Reuters