Fiat downplays imminent expectation of Opel bid

MILAN/FRANKFURT Fri Apr 24, 2009 2:49pm EDT

Related Topics

MILAN/FRANKFURT (Reuters) - With just six days left to clinch a landmark deal with U.S. car maker Chrysler LLC, Fiat SpA FIA.MI sought to play down expectations it was about to make an imminent offer for Opel, General Motors Corp's (GM.N) German unit.

Fiat's chief executive also strongly rebuked a top EU official for questioning the Italian group's ability to pay for an Opel stake, saying "issuing death sentences" did not help an industry trying to restructure in its worst crisis in decades.

Fiat, which has spoken of the need for consolidation in the industry, has emerged as a possible suitor for Opel, whose future depends on GM and the German government finding an investor.

Opel Chief Executive Hans Demant said he was pleased about the interest in the troubled car maker and pledged to keep these parties informed of the situation.

Amid growing reports of its interest in Opel, which drew scorn from a German labor leader, Fiat released a statement on Friday denying it had made a move.

"No offer has been made to acquire an interest in Opel," it said.

Although he is focused on a partnership deal with Chrysler CBS.UL which is facing possible bankruptcy, Fiat Chief Executive Sergio Marchionne told analysts on Thursday he would be able to start talks with another automaker.

BAD EXPERIENCE

Armin Schild, a powerful German labor leader who holds a seat on Opel's supervisory board, rejected the idea of a Fiat bid, preferring an investor such as Magna International Inc MGa.TO, a Canadian parts maker that has also been cited as a possible investor.

"We have experience of working with Fiat -- this experience has been extraordinarily bad," he told German TV, referring to an alliance between Fiat and GM that ended in 2005.

His comments highlighted the risk union opposition could frustrate efforts to find a buyer for Opel.

European Union Industry Commissioner Guenter Verheugen later questioned Fiat's ability to work on two deals at the same time, telling German radio he wondered how a highly indebted company such as Fiat would find the money to do it.

"Fiat is not exactly the European carmaker that is doing the best," he said.

Marchionne quickly responded, saying he was "astounded" by the comments and called on Verheugen to help rather than hurt the industry.

"I would have expected him to engage in constructive dialogue with the European carmakers ... rather than issuing death sentences for the industry or unilaterally selecting who will survive," he said in a statement.

Italian Foreign Minister Franco Frattini also came to Fiat's defense, accusing Verheugen of interference.

A Verheugen spokesman later sought to put an end to the spat, saying the comments did not have an unfriendly intent.

GM needs to sell a big stake in Opel to qualify for 3.3 billion euros ($4.35 billion) in loan guarantees from European governments that Opel says it needs to tide it over.

Five months before a federal election, the German government is likely to welcome any option that avoids mass layoffs at Opel, which employs about 25,000 people in Germany. However, a deal with Fiat would likely entail job cuts due to overlaps.

A German spokesman said on Friday strategic and financial investors had expressed interest in Opel.

But German Economy Minister Karl-Theodor zu Guttenberg has said little had been presented by way of a formal proposal from potential investors.

(Additional reporting by Christiaan Hetzner and John O'Donnell in Frankfurt, Christoph Steitz in Cologne, Francesco Guarascio in Brussels, Deepa Babington in Rome and Danilo Masoni in Rome; Editing by David Cowell, John Stonestreet and Andre Grenon)

FILED UNDER: