The chief executive of Fiat, Sergio Marchionne, said on Monday he plans to create a new global auto company made up of Fiat, Opel and Chrysler with annual sales of up to 7 million cars and €80 billion in revenues.
Marchionne, in Berlin to present his plan to German Economy Minister Karl-Theodor zu Guttenberg and Deputy Chancellor Frank-Walter Steinmeier, told the Financial Times that a tie-up between the three automakers would be a “marriage made in heaven.”
German Economy Minister Karl-Theodor zu Guttenberg said after his meeting with Marchionne: “It’s an interesting approach, without question.” But he added that the plan needed to be examined more closely.
He said the German government, keen to save jobs at GM’s Opel unit ahead of a September election, would look at the details of the plan and also consider other options.
Opel’s three final assembly plants in Germany — Rüsselsheim, Bochum and Eisenach — would be safe under Marchionne’s plan, but an engines and parts factory in Kaiserslautern could be hit, Guttenberg said.
Fiat faces a possible rival offer for Opel from Austrian-Canadian car parts maker Magna. But the biggest opposition to a Fiat-Opel deal between may come from unions in both countries. They fear a merger will lead to major job cuts.
There’s a political row in Germany about the future of Opel, with prominent members of the center-left Social Democrats (SPD) and trade union representatives favoring a tie-up with Magna while Chancellor Angela Merkel’s conservative Christian Democrats (CDU) want to keep on negotiating with Fiat as well.
The SPD, which shares power with the CDU, fears that an Opel merger with Fiat would lead to major job losses and that the Italian carmaker may be mainly focused on securing German governnment credit guarantees rather than genuinely interested in Opel’s future.
The CDU has argued that the SPD is just echoing union misgivings about Fiat because it wants to win votes in the general election on September 27.
Fiat wants to take over Opel after reaching a deal last week to buy an initial 20 percent of US automaker Chrysler on Thursday.
German magazine WirtschaftsWoche cited sources close to the negotiations as saying Fiat had already made an offer for Opel of less than €1 billion ($1.33 billion), which its US parent company General Motors considered too small.
The reported €1 billion offer is far higher than figures in earlier media reports, which said GM could sell Opel and UK-based Vauxhall at no gain if the investor guaranteed to inject capital into the firm.
After a meeting by Fiat’s administrative board on Sunday evening, the company said it could spin off Fiat’s core cars division and join it with Chrysler and GM’s European operations (Opel, Vauxhall of the UK and Saab of Sweden) to create a new, publicly traded European car company.
The potential car sales of the resulting auto giant would be less than Toyota but more than Renault/Nissan or Ford Motor and approximately as many as Volkswagen, the Financial Times calculated.
The newspaper also estimated that based on past mergers and the size of Fiat and Opel, some 8,000-9,000 jobs could be cut across Europe in a merger.
Marchionne told the FT he hoped to complete the deal by the end of May, and list shares of the new company — tentatively called Fiat/Opel — by the end of the summer.