Such A Deal
Imagine being able to get a large interest in a major corporation with no financial contribution at all. And then further imagine being able to increase the size of your holding, yes, without any financial investment. That unlikely scenario is what is likely to take place in the coming week.
Link
Yes, Fiat, will have to buy that final 16 percent and will be contributing its own technology to Chrysler. But there is little to no downside here. Fiat will essentially be able to reenter the north American market, without the substantial costs that such an undertaking might otherwise involve. Production and distribution will be aided by the by the US taxpayer.
The downside is that Chrysler will likely lose much, if not all, of what makes it unique. It will become an arm of Fiat, another brand added to the collection that includes Alfa Romeo, Ferrari and Maserati amongst others. Yes, Jeep will likely show little change but the remainder of the lineup will most certainly be replaced entirely. And Chrysler will be saved. But at what cost? Will the company that brought us the highly innovative and influential Airflow in the 1930s still be an American car company?
Link
Fiat, based in Turin, Italy, would take an initial stake of 20 percent in Chrysler that could increase to as much as 35 percent by achieving operating goals. The automaker then would have an option to buy 16 percent more of Auburn Hills, Michigan- based Chrysler over seven years assuming government loans are repaid, according to a Fiat presentation on its Web page.
Fiat won’t put cash into Chrysler without receiving a controlling interest, said Marchionne, 56. Fiat would share its auto technology and global distribution, contributions Chrysler values at as much as $10 billion. The U.S. automaker is 80 percent owned by the New York-based investment firm Cerberus Capital Management LP.
Yes, Fiat, will have to buy that final 16 percent and will be contributing its own technology to Chrysler. But there is little to no downside here. Fiat will essentially be able to reenter the north American market, without the substantial costs that such an undertaking might otherwise involve. Production and distribution will be aided by the by the US taxpayer.
The downside is that Chrysler will likely lose much, if not all, of what makes it unique. It will become an arm of Fiat, another brand added to the collection that includes Alfa Romeo, Ferrari and Maserati amongst others. Yes, Jeep will likely show little change but the remainder of the lineup will most certainly be replaced entirely. And Chrysler will be saved. But at what cost? Will the company that brought us the highly innovative and influential Airflow in the 1930s still be an American car company?
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