Fiat Motors Is Worth Only $5.5 Billion
May 6th, 2009 7:07 PM
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Considerare l’aritmetica, asks Rob Cox at breakingviews.com. Sure, the Chrysler freebee deal has sent Fiat stock soaring, but if you strip away the non-auto components of the Fiat group and factor in the firm’s $8 billion in debt, and what’s left is worth only $5.5 billion, according to Cox’s math. Which means Fiat will face some major challenges in cobbling together its 5 million annual global sales empire, a fact we’ve already explored here. And based on Chrysler’s insatiable appetite for taxpayer dollars, Fiat’s going to have a tough time just feeding the cash-burn beast.
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Hmmm, ripping open a space-time singularity right here on our planet would certainly solve a lot of the world's problems!
Marchionne will be the new CEO of Chrysler when (if) it emerges from bankruptcy: http://www.bloomberg.com/apps/news?pid=20601087&sid=aaOneH_aNcs0&refer=home
What's really going to be interesting to see, assuming Newco and GM make it out of bankruptcy, is how consumers respond to government-backed firms vs. those that are still fully private (Ford). If Newco and GM can somehow turn their government funding into an advantage, either in product or the "deal", Ford may be next in line. Although the odds seem long that these mergers can result anything good, recall that both General Motors and Audi (Auto Union) were the result of mergers of struggling auto companies in the early 20th century. So it has been done before.
"Which means Fiat will face some major challenges in cobbling together its 5 million annual global sales empire, a fact we’ve already explored here. And based on Chrysler’s insatiable appetite for taxpayer dollars, Fiat’s going to have a tough time just feeding the cash-burn beast." I thought FIAT was not going to be putting any money into this deal? If so, there is not "beast" to feed. Did something change?