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Italian carmaker Fiat is in talks about buying the European business of General Motors (GM) - which includes the UK’s Vauxhall and Germany’s Opel brands.
Fiat is already taking a 20% stake in Chrysler, the US carmaker that has applied for US bankruptcy protection.
And it said it was considering merging its carmaking business with those of Chrysler and GM Europe in what is being viewed as a long-awaited major consolidation of the global motor industry.
Saab is also part of GM Europe, but may not be part of the discussions as it is being reorganised under Swedish law.
Over the weekend a series of meetings were held between leading Fiat officials and German government ministers to discuss the bid for Opel. Following the meetings, the German government set out 14 conditions for any Opel deal, including maintaining its German headquarters.
Meanwhile, UK unions have voiced opposition to a deal because they fear it poses a threat to the future of Vauxhall and its factories in Luton and Ellesmere Port. Tony Woodley, joint general secretary of Unite, said the deal would be an ‘unmitigated disaster’. He added: “Inevitably plants will be reduced across the European Union and there are questions over what this will mean for UK plants.”
The UK Government is also talking to Fiat on a range of issues, but officials are effective bystanders in the current negotiations.
Fiat chairman Luca Cordero di Montezemolo said Opel would be an ‘ideal partner’ and that a takeover was an ‘extraordinary opportunity’.
GM faces potential bankruptcy in the US and has until June 1 to restructure.
Mr de Montezemolo told Italy’s Corriere della Sera newspaper that a Fiat takeover of Opel would create ‘a very strong group’.
And in an interview with the Financial Times, Fiat chief executive Sergio Marchionne said that such a move would be a ‘marriage made in heaven’ and could be completed this month.
If Fiat is successful, a new European-based company would be created with about €80 billion of revenue and sales of six to seven million vehicle a year - that would put it second to Toyota in global terms.
However, it has also emerged that Fiat is seeking €5-7 billion in guarantees from European governments to cement the European wing of the new car giant.
The creation of a new automotive giant is likely to see Fiat Auto spun out of the structure of its parent company and into a new operation that would include GM and Chrysler. However, Fiat’s luxury marques, Ferrari and Maserati, are likely to remain within the conglomerate’s current structure.
However Canadian car parts maker Magna International has also put forward what the German government has called a ‘rough concept for a commitment with Opel’.
Additionally, GM Europe has said that it is not committed to the Fiat deal and was in talks with ‘several possible investors’ to ensure both Vauxhall and Opel were a more independent part of the GM product network.
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