Potential Chrysler and Fiat Alliance Anticipated
25th January, 2009
Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority
owner of Chrysler LLC, announced yesterday they have signed a non-binding term sheet to
establish a global strategic alliance.
The alliance, to be a key element of Chryslerís 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
Chryslerís 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 optimise 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 Chryslerís
restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such
steps would greatly contribute to Chryslerís 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 Groupís contribution to the alliance of strategic assets, to include: product
and platform sharing, including city and compact segment vehicles, to expand Chryslerís 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 per cent 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.
ďThis 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 recognised
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 car makers and automotive suppliers over the last five
years aimed at supporting the growth and volume aspirations of the partners involved,Ē 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).
About Chrysler LLC
Chrysler LLC, headquartered in Auburn Hills, Michigan, USA, produces Chrysler, Jeep, Dodge brand vehicles and
and Mopar products. Total sales worldwide in 2008 were 2 million vehicles. Outside of North America, 2008 was the
second-best sales year in the last decade and the third-best ever for Chrysler International. Chrysler LLCís
product line-up features some of the world's most recognisable vehicles, including the Chrysler 300 and Town &
Country, Jeep Wrangler and Grand Cherokee and Dodge Challenger and Ram. In the northern autumn of 2008, Chrysler
introduced three advanced electric-drive vehicle prototypes Ė the Dodge EV, Jeep EV and Chrysler EV. One is
targeted to be produced in 2010 for consumers in North American markets, and European markets after 2010.
Founded in 1899, Fiat is an automotive-focused industrial group, serving customers in more than 190 countries
around the world. With some 185,000 employees, 114 R&D centers and 178 plants worldwide, the Fiat Group designs,
manufactures and sells passenger cars (Fiat, Lancia, Alfa Romeo, Abarth, Maserati and Ferrari), agricultural and
construction equipment (CNH Case New Holland), trucks and industrial vehicles (Iveco), and automotive components
(FPT Powertrain Technologies, Magneti Marelli and Teksid).
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