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Fiat in Talks to Buy Stake in GM\'s Opel
By MARCUS WALKER, DANA CIMILLUCA and STACY MEICHTRY
Italian car maker Fiat SpA is in talks to buy a stake in General Motors Corp.'s German-based unit Adam Opel GmbH as part of a wide-ranging strategy to become one of the world's largest auto makers, according to people familiar with the matter.
Fiat Chief Executive Sergio Marchionne held talks in Berlin last week with German Economy Minister Karl-Theodor zu Guttenberg, who is leading the German government's search for a new investor in Opel, one person said.
Any potential partnership between Fiat and Opel, however, is contingent upon the outcome of talks Fiat is holding on the other side of the Atlantic with Chrysler LLC to potentially acquire a 20% stake in the Detroit auto maker, a person close to Fiat said.
That's why the Italian car maker is keeping its discussions with Opel on the back-burner until any Chrysler deal is reached.
Asked about Opel during a conference call with analysts, Mr. Marchionne said: "I don't have anything to announce."
"We're open to dialogue, and we have dialogue with a number of auto companies around the world," added Mr. Marchionne, reiterating that Fiat aimed to find partners who could boost the Italian car maker's annual production to between five and six million cars a year.
Fiat's goal is to triple its car production, which is currently 2.2 million units per year, in order to compete with some of the world's biggest auto makers.
Fiat approached GM months ago to propose a deal that would have the two companies cooperating in several markets, including Europe and Latin America -- where both auto makers have significant operations, according to several people briefed on the matter. The deal, known internally as Project Phoenix at GM, wouldn't immediately include collaboration in the U.S. or Asia, according to these people.
Fiat is one of a few potential investors who have held detailed talks with the German government in recent weeks. Hesse state premier Roland Koch said on Thursday that auto-parts maker Magna International was also among those interested in Opel.
Separately, Fiat Thursday posted a first-quarter net loss as global auto, construction-equipment and truck sales slumped, but said it expects to generate a full-year net profit of about €100 million ($130 million) as demand is set to recover.
"We expect an improvement in the remainder of the year, as trading conditions stabilize and improve for most of our business," Fiat said, adding that the truck and construction equipment businesses will show "signs of recovery only visible in the fourth quarter."
Fiat posted a quarterly net loss of €410 million, compared with a net profit of €405 million in the same period a year earlier. The result was worse than analysts' expectations for a net loss of €300 million. But Fiat's small trading loss of €48 million was better than analysts' hopes, and beat even Fiat's own internal expectations, the company said.
"The group's trading performance was substantially break even as a result of sharply lower volumes offset by rigorous cost containment measures, including prudent reductions in production levels to respond to weaker demand," Fiat said. It posted a trading profit of €766 million a year ago.
The Italian company saw its own auto unit slide to a trading loss of €30 million as revenue fell 18% to €5.6 billion from €6.83 billion. That compared to an operating profit before exceptional items of €193 million the year before.
Analysts had expected a trading loss of €110 million at Fiat Auto, which includes the Fiat, Lancia and Alfa Romeo brands, but excludes Ferrari and Maserati. But car sales incentives in some European markets and Brazil helped stem the revenue decline.
Overall revenues for the group, which includes truck maker Iveco and agricultural machines producer CNH as well as Fiat Powertrain Technologies and Magneti Marelli, was €11.27 billion, down from €15.08 billion.
Net debt increased to €6.6 billion from €5.9 billion at the end of last year "due to rigorous working capital management and increased discipline in capital expenditures," Fiat said. The closely watched debt figure was in line with expectations.
Liquidity improved to €5.1 billion, up from €3.9 billion, since the group finalized an €1 billion syndicated credit facility and tapped the U.S. asset-backed securities market for €500 million.
The improvement in liquidity helped boost the stock price, with shares up 0.9% to €7.54 at midday in Milan. "The net loss is not a big deal, the market was expecting that," said an analyst at a Milan brokerage. "The market is looking at debt and at cash generation." (source:online.wsj.com)
Italian car maker Fiat SpA is in talks to buy a stake in General Motors Corp.'s German-based unit Adam Opel GmbH as part of a wide-ranging strategy to become one of the world's largest auto makers, according to people familiar with the matter.
Fiat Chief Executive Sergio Marchionne held talks in Berlin last week with German Economy Minister Karl-Theodor zu Guttenberg, who is leading the German government's search for a new investor in Opel, one person said.
Any potential partnership between Fiat and Opel, however, is contingent upon the outcome of talks Fiat is holding on the other side of the Atlantic with Chrysler LLC to potentially acquire a 20% stake in the Detroit auto maker, a person close to Fiat said.
That's why the Italian car maker is keeping its discussions with Opel on the back-burner until any Chrysler deal is reached.
Asked about Opel during a conference call with analysts, Mr. Marchionne said: "I don't have anything to announce."
"We're open to dialogue, and we have dialogue with a number of auto companies around the world," added Mr. Marchionne, reiterating that Fiat aimed to find partners who could boost the Italian car maker's annual production to between five and six million cars a year.
Fiat's goal is to triple its car production, which is currently 2.2 million units per year, in order to compete with some of the world's biggest auto makers.
Fiat approached GM months ago to propose a deal that would have the two companies cooperating in several markets, including Europe and Latin America -- where both auto makers have significant operations, according to several people briefed on the matter. The deal, known internally as Project Phoenix at GM, wouldn't immediately include collaboration in the U.S. or Asia, according to these people.
Fiat is one of a few potential investors who have held detailed talks with the German government in recent weeks. Hesse state premier Roland Koch said on Thursday that auto-parts maker Magna International was also among those interested in Opel.
Separately, Fiat Thursday posted a first-quarter net loss as global auto, construction-equipment and truck sales slumped, but said it expects to generate a full-year net profit of about €100 million ($130 million) as demand is set to recover.
"We expect an improvement in the remainder of the year, as trading conditions stabilize and improve for most of our business," Fiat said, adding that the truck and construction equipment businesses will show "signs of recovery only visible in the fourth quarter."
Fiat posted a quarterly net loss of €410 million, compared with a net profit of €405 million in the same period a year earlier. The result was worse than analysts' expectations for a net loss of €300 million. But Fiat's small trading loss of €48 million was better than analysts' hopes, and beat even Fiat's own internal expectations, the company said.
"The group's trading performance was substantially break even as a result of sharply lower volumes offset by rigorous cost containment measures, including prudent reductions in production levels to respond to weaker demand," Fiat said. It posted a trading profit of €766 million a year ago.
The Italian company saw its own auto unit slide to a trading loss of €30 million as revenue fell 18% to €5.6 billion from €6.83 billion. That compared to an operating profit before exceptional items of €193 million the year before.
Analysts had expected a trading loss of €110 million at Fiat Auto, which includes the Fiat, Lancia and Alfa Romeo brands, but excludes Ferrari and Maserati. But car sales incentives in some European markets and Brazil helped stem the revenue decline.
Overall revenues for the group, which includes truck maker Iveco and agricultural machines producer CNH as well as Fiat Powertrain Technologies and Magneti Marelli, was €11.27 billion, down from €15.08 billion.
Net debt increased to €6.6 billion from €5.9 billion at the end of last year "due to rigorous working capital management and increased discipline in capital expenditures," Fiat said. The closely watched debt figure was in line with expectations.
Liquidity improved to €5.1 billion, up from €3.9 billion, since the group finalized an €1 billion syndicated credit facility and tapped the U.S. asset-backed securities market for €500 million.
The improvement in liquidity helped boost the stock price, with shares up 0.9% to €7.54 at midday in Milan. "The net loss is not a big deal, the market was expecting that," said an analyst at a Milan brokerage. "The market is looking at debt and at cash generation." (source:online.wsj.com)
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