From The Wall Street Journal:
Under terms of a pact that is being hammered out, Fiat is likely to take a 35% stake in Chrysler by the middle of this year. It would have the option of increasing that to as much as 55%, these people said.
Fiat, the stronger of the two, wouldn't immediately put cash into Chrysler. Instead it would obtain its stake mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models to be sold in the U.S., these people said. Fiat would also provide engine and transmission technology to help Chrysler introduce new, fuel-efficient small cars, they said.
More from The Wall Street Journal:
...the deal becomes binding only if Chrysler gets $3 billion more in financial help from Washington, said the people familiar with the terms of the agreement.
A Fiat spokesman declined to comment on the matter. Chrysler spokeswoman Shawn Morgan wouldn't comment on Fiat's demand, but said Chrysler believes the $3 billion in loans are necessary for its viability.
A Fiat spokesman declined to comment on the matter. Chrysler spokeswoman Shawn Morgan wouldn't comment on Fiat's demand, but said Chrysler believes the $3 billion in loans are necessary for its viability.
Under the terms of the deal, the Italian auto maker will be given three seats on Chrysler's seven-seat board, two people familiar with the matter said.
If Fiat meets goals for improving Chrysler's operations within 12 months of the agreement, Fiat would have the option of buying an additional 20% of Chrysler for about $25 million, said people familiar with the matter. Details of the goals weren't clear.
If Fiat meets goals for improving Chrysler's operations within 12 months of the agreement, Fiat would have the option of buying an additional 20% of Chrysler for about $25 million, said people familiar with the matter. Details of the goals weren't clear.
Finally this is from Reuters:
Under its U.S. government rescue, Chrysler must demonstrate by the end of March that it can be viable, and the automaker said the proposed Fiat deal would move it toward that goal.
Fiat said it would aid Chrysler in putting together its turnaround plan for U.S. officials ahead of an initial February 17 deadline.
Fiat said it would aid Chrysler in putting together its turnaround plan for U.S. officials ahead of an initial February 17 deadline.
Chrysler also said it would be given access to all of Fiat's vehicle platforms, except the Ferrari sports car line.
JP Morgan analyst Himanshu Patel said the deal appeared to have "minimal downside" for both Fiat and Chrysler and could help the U.S. automaker secure another round of bailout funds.
"While Fiat will not provide a cash equity injection, its willingness to dance with Chrysler may provide Washington just enough cover to lend Chrysler additional funds," Patel said in a note for clients.
