Cerberus Gives Fiat 35% of Chrysler
So, this is how it’s gonna go, eh? Chrysler’s going to dress-up the cratered car company long enough to use federal funds to stay alive long enough to strip and flip the company’s assets. Sweet. For some. More specifically, if Fiat’s grabbing 35 percent of Chrysler, can we, the taxpayers, have our $4b back now please? Nope. “The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.” Jeez. Couldn’t they at least contemplate it? Anyway, a joint statement (don’t bogart that BS, my friend) explains the thinking “The alliance, to be a key element of Chrysler’s viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler’s submission of a viability plan to the U.S. Treasury as required.” That last one’s kinda weird. What “management services” are required to write a viability plan? Emptying the waste baskets?
PRESS RELEASE: Fiat Group, Chrysler and Cerberus Announce Plans for a Global Strategic Alliance
Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority owner of Chrysler LLC, announced today they have signed a non-binding term sheet to establish a global strategic alliance.
The alliance, to be a key element of Chrysler’s viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler’s submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other’s distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.
The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler’s restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler’s long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury.
As a consideration for Fiat Group’s contribution to the alliance of strategic assets, to include: product and platform sharing, including city and compact segment vehicles, to expand Chrysler’s current product portfolio; technology sharing, including fuel efficient and environmentally friendly powertrain technologies; and access to additional markets, including distribution for Chrysler vehicles in markets outside of North America, Fiat would receive an initial 35 percent equity interest in Chrysler. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.
“This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefitting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved,” the CEO of Fiat Group, Sergio Marchionne said.
“A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing,” said Bob Nardelli, Chairman and CEO of Chrysler LLC. “This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the Government Loan. The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs.”
“This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler’s long term viability,” said Ron Gettelfinger, President United Auto Workers (UAW).
“We’re on board with this important strategic initiative as it will help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs,” said General Holiefield, Vice President, United Auto Workers (UAW).
Join the conversation
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- Art Vandelay Interesting, the Polestar 2 I had as a rental utilized Android Automotive which is what GM said it is going to exclusively, yet it still offers Apple CarPlay according to this. Wonder if GM will do the same.
- Stuart de Baker EVs just aren't ready for prime time for those with a single car and who take road trips. Being able to charge as soon as you arrive at a charging station, and even the chargers working on your car is a crapshoot. In the former case, you could have to wait for nearly an hour while someone else is charging.I also don't find EVs particularly fun to drive (I've driven a Tesla Model S and an Ionic 5.) I LOVE driving my '08 Civic (stick). I love the handling, the feel and responsiveness of the engine, the precise steering (the Michelin Pilot Ultra Sport tires help, but even with the snows on, the car is a joy). I have 152k on the clock, and hopefully another 25 years or so of driving (I was born early in the Eisenhower Administration and I have exceptionally healthy habits), and I'm going to try to keep the Civic for the duration.My Civic causes a less global warming emissions than some of these humongous battery operated trucks.
- FreedMike They should throw in a Lordstown pickup with every purchase. Make it the “vapor twofer.”
- Random1 Pretty excited about this update, I didn't see it available in mine this morning, but any day now... I think only Apple maps will be on the center display, and not Waze yet, but I assume that'll come soon enough. As to the unnecessary Tesla comment above : I'll take the build quality, the looks, and generally normal items that all cars should have over the M3 any day of the week.
- Jonathan H. The ES production is going back to Japan so it's safe to assume its assembly building will be utilized for the new EV. Seems like a good fit for what will probably be fairly low volume compared to the Camry/Rav4 assembly lines.
Hey, maybe Alfa can make an SUV and they can rebadge it as a Jeep, and heck, why not a Dodge too? Alfa Mafioso/Dodge Guido/Jeep Linguine coming right up! If you think 'the deal' (as Lido would say) is going to bring you nice Alfas at decent prices, think again. More Leeisms: If you can buy a better rebadge, buy it! ... such as the upcoming Buick Forbidden City or Pontiac Pikachu. Or not. I'm for the Ford Kär/Mercury Malmö (Volvo rebadges).
to honour Fiat's dollarless investment, I am canceling my order for a 2009 Jetta TDI - forfeiting the deposit - and ordering 2 Ka's for my driveway...i.e., KaKa in my driveway p.s. is there gift tax on Cerebus' gift to Fiat?