Fiat takeover plan of Chrysler hits obstacles

The Chrysler bankruptcy debacle rumbled on yesterday, as a group of around 20 of the company’s creditors went to a New York bankruptcy court to try to block its restructuring. They are claiming that they have had their rights as senior lenders removed by the bankruptcy process.

At the same time, the German government put in place a number of conditions for any buyer of General Motors’ German arm Opel after meeting Fiat’s senior management, including chief executive Sergio Marchionne.

It is thought that Berlin is keen to put in place up to 14 conditions surrounding any takeover by the Italian company, including basing any new company in Germany.

Along with Fiat, it is thought that six or so other groups are in the running to take a stake in Opel and Vauxhall as well as the rest of GM Europe, including Canadian car parts group Magna International, private equity groups and sovereign funds from the

Middle East.

Fiat took a 20 per cent stake in Chrysler last week but is keen to gain economies of scale in Europe and plans to produce 5 to 6 million vehicles per year, generating revenues of €80bn. The company’s new business would then be spun off and listed separately from its other operations.

Trade unions in the UK voiced concern over the plans, claiming any safeguarding of German factories would jeopardise GM’s other European plants, including operations at Ellesmere Port and Luton.

WHAT THEY ARE SAYING
Pierre Briancon, BreakingViews.com: "Opel is for all practical matters a German company. The marriage of Fiat's management culture with the German way of doing things might prove tricky- to say the least. If he takes on the Opel mess on top of the Chrysler debacle, Marchionne will not only become seriously over-extended. He will also have to try to become one of the first foreigners to run a German group successfully."

Professor Garel Rhys, Cardiff Business School's Centre for Automotive Industry Research, in the Independent: "The UK business is very much at the margins of this deal, but if I worked at Ellesmere Port I would be less worried now than I was last week. The factory itself is efficient and doesn't lose money, and Fiat has both a huge presence in Europe and a desire to build up goodwill in the UK."