U.S. car maker General Motors Corp (GM.N) could take a stake in the company that would be created by merging its European car business with Fiat SpA's (FIA.MI) auto unit, a source close to the situation said on Thursday.
As part of a massive restructuring to survive the automobile
industry crisis, Fiat has been in talks with GM about combining their
businesses in the region, which would include GM's German unit, Opel.
The source said that the size of GM's stake would depend on which
parts of its business would end up in the new company. GM's other
brands in Europe include Saab and Chevrolet.
The New York Times said on its website that GM wanted at least 30
percent but Fiat was only willing to give up less than 10 percent.
Fiat shares were off 1.27 percent at 7.78 euros in Milan by 1314 GMT.
Both Fiat and GM Europe declined to comment on the matter when contacted by Reuters.
The Fiat-GM talks, which began in earnest last week after Fiat
sealed a deal to form a partnership with another struggling U.S. car
maker, Chrysler LLC CBS.UL, have raised fears about plant closures and
massive job losses across Europe to cut costs.
GM's results on Thursday showed that it had burned through $10.2
billion in the first quarter, operating under a federal bailout. It
posted a quarterly net loss of $6 billion, compared with a loss of $3.3
billion a year earlier.
Fiat's move on Opel has met opposition from Germany's unions, which favor a bid by Magna International (MGa.TO), an Austrian-Canadian car parts manufacturer.
A member of Opel's supervisory board told Reuters that Magna had presented a more concrete proposal so far.
The latest union outcry on possible widespread job cuts came from
the secretary general of FIOM-CGIL, one of Italy's biggest unions.
Gianni Rinaldini said the idea of plant closures in Fiat's home market of Italy was unacceptable.
(Such an) irresponsible plan would lead to serious social conflict, Rinaldini said in a statement on Thursday.
In response to the growing concern about possible job cuts and
factory closures, Italian Industry Minister Claudio Scajola sent a
letter to Fiat asking for a meeting to hear more about the company's
plans for its Italian factories.
Although Fiat's plan -- codenamed Project Phoenix -- does not
include plant closures, it does mention a downsizing of them, which
would inevitably lead to job cuts, according to the source, confirming
a German newspaper report.
Questioned by reporters at an event in St Gallen, Switzerland, about
these job fears, Fiat Vice Chairman John Elkann said the aim was to
create a strong car maker with long-term prospects.
That's today what really matters, Elkann said.
Asked about the New York Times report that GM saw its Latin American
business as a bargaining chip for a stake in the merged company,
Elkmann said the talks were so far focused on Europe.
Fiat is trying to survive the crisis by building up its size rather
than by selling assets. If it manages to reach a deal with GM, it would
create the world's second-largest automaker after Toyota (7203.T).
Fiat has spoken of the possibility of spinning off the combined group and listing it on a stock exchange.
GM is currently running due diligence on about 10 bidders for its
Saab brand, a source familiar with the matter told Reuters. Fiat did
not bid in the first round, but it has expressed an interest in the