Fiat will wait until at least the 2nd of February before exercising its right to sell its troubled car division to General Motors. In ongoing talks, GM is trying to negotiate its way out of the deal which dates from a time when Fiat was in better financial health than it is now.
Fiat Chief Executive Sergio Marchionne said the prospect of the GM sale was the reason Fiat did not go ahead with other partnerships. In 2000 GM bought 20% of the Italian carmaker, with an option to buy the rest later. Now GM is arguing Fiat breached the terms of their agreement when it sold 51% of Fiat Auto’s financing division and pumped the three billion euros raised into the company. GM refused to take part in that recapitalisation and so its stake in Fiat Auto was diluted to 10%. The American company, which already has a loss making European operation, has said that Fiat – with 8.5 billion euros of debt – is not worth buying. But motor industry analysts expect GM will have to pay around 1.5 billion euros in cash and offer Fiat concessions in their various joint ventures to get out of the agreement.