Fiat's chief outlines merger plans: report

LONDON (Reuters) - The chief of Italy's Fiat SpA FIA.MI outlined his plans for spinning off its core cars division, joining it with Chrysler and General Motors Corp's GM.N Europe unit to create a new publicly traded European car giant, the Financial Times reported on Monday.

Fiat CEO Sergio Marchionne poses for photographers next to the new Cinquecento Fiat car during a photocall in Turin July 5, 2007. REUTERS/Alessandro Garofalo

Fiat Chief Executive Sergio Marchionne said Fiat and Opel would reap synergies of 1 billion euros a year from the deal, according to the paper.

“From an engineering and industrial point of view, this is a marriage made in heaven,” he told the paper in an interview.

Marchionne, fresh from a partnership with ailing U.S. automaker Chrysler, will meet German government ministers on Monday to discuss a bid for German carmaker Opel, part of GM Europe.

Fiat had issued a statement on Sunday in which it said it would “evaluate several corporate structures, including the potential spin-off of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with those of General Motors Europe.”

A combined company would have yearly revenue of about 80 billion euros, Fiat said.

Its statement did not mention Opel, which makes up 80 percent of GM Europe’s revenue.

Marchionne gave further details of the proposed plan, including a date of the end of May for the transaction to be completed, and the end of the summer for shares of the new company to be listed, the paper reported.

“An agreement in principle has to be struck in 30 days,” he was quoted as saying.

The company, tentatively called Fiat/Opel, would merge their small B and midsize C segment car platforms, and absorb Fiat’s ultra-small A platform and Opel’s upper-middle D platform, the paper said.

Marchionne plans to ask the British government, and those of other European countries where Fiat and Opel have plants, to offer the new company loan guarantees, the FT said.

He will say the deal is important for Europe, currently being battered by an economic downturn, the paper said.

“This is a real opportunity to make the European Union work as a union,” he was quoted as saying. “If we don’t do this, it’s a failure of our efforts to create a single market.”

The new company would see the Agnelli family’s 30 percent shareholding of Fiat Auto diluted after the spin-off, with GM also a minority shareholder in Fiat/Opel, the paper said.

The merged company would also include Saab, GM’s small Swedish brand which it is selling separately, the paper said.

The new company may also include GM’s Latin American operations, the FT reported.

Ferrari and Maserati luxury carmakers would stay with the parent, the paper said.

The FT said Marchionne was considering stepping down next year as non-executive vice-chairman of UBS.

Reporting by Avril Ormsby; Editing by Richard Chang