Fiat’s new tie-up with Chrysler (which sees it get a 35 percent stake in exchange for its platform and engine technology) is the second time in the last 10 years the Italian carmaker has headed for altar.
Back in March 2000 Fiat entered into a tie-up with General Motors. It was in pretty good health at the time, producing around 2.7m cars. But GM’s Opel/Vauxhall brand was not. Opel in particular was suffering in its home market, with neither the Corsa nor Vectra selling well.
In light of evidence that its European arm was fading fast, GM decided it would be good idea to tie-up with Fiat, combining forces on front-drive and engine technology, spreading costs and pain.So GM spent $2.5bn on a 20 percent share in Fiat Auto and, in exchange, Fiat SpA got 5.1 percent of GM’s shares.
However, some Italian bright spark decided to insert a ‘Put option’ into the deal, which meant Fiat could effectively force GM (from late 2003 onwards) to buy the remaining 80 percent of Fiat Auto shares. At the time, nobody paid much attention to this quirky clause.