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Fiat and Chrysler create alliance Fiat and Chrysler create alliance
(about 1 hour later)
Italian carmaker Fiat and US giant Chrysler have agreed to create a global strategic alliance, the companies said in a statement.Italian carmaker Fiat and US giant Chrysler have agreed to create a global strategic alliance, the companies said in a statement.
Under the terms of the deal, Fiat will get a 35% stake in the troubled US firm in return for access to its fuel-efficient vehicle technologies. Under the terms of the deal, Fiat will get a 35% stake in Chrysler. In return, the US firm will get access to Fiat's fuel-efficient vehicle technologies.
Fiat would also be able to improve its presence in the US market. It is hoped the agreement will lead to "substantial" savings for Chrysler.
Chrysler is one of two Detroit-based carmakers to have received emergency US government loans. It is one of two Detroit-based carmakers to have received emergency US government loans.
The $4bn (£2.7bn) emergency aid from the US government was given in a deal to help Chrysler stay in business.
The two companies' statement said Fiat would provide Chrysler with "substantial cost saving opportunities".
"Fiat has been very successful in executing its own restructuring over the past several years," the statement said."Fiat has been very successful in executing its own restructuring over the past several years," the statement said.
Who gets what
This initiative represents a key milestone in the rapidly changing landscape of the automotive sector Sergio Marchionne, Fiat Group chief executive
Under the terms of the deal Chrysler will get:
• Access to Fiat's environmentally friendly vehicle technologies and components
• "Substantial cost savings opportunities"
• Access to Fiat's distribution network in "key growth markets" outside the US and its global supplier base.
In return, Fiat will receive:
• Access to Chrysler's distribution network and suppliers
• A 35% equity stake in Chrysler.
The statement points out, however, that the agreement does not commit Fiat to funding Chrysler in future.
The completion of the deal is subject to approval from regulatory authorities, including the US Treasury.
Earlier on Tuesday, trading in Fiat shares was suspended amid speculation of a possible partnership with the US firm.Earlier on Tuesday, trading in Fiat shares was suspended amid speculation of a possible partnership with the US firm.
"We have been in talks about this for some time," John Elkann, a member of Fiat's founding Agnelli family, told Italian reporters.
Also on Tuesday, German carmaker Daimler said it was still interested in selling its 20% stake in Chrysler.Also on Tuesday, German carmaker Daimler said it was still interested in selling its 20% stake in Chrysler.
Carmakers around the world have seen their sales plummet amid the ongoing global economic slowdown.
Fiat chief executive Sergio Marchionne said the deal represented "a key milestone in the rapidly changing landscape of the automotive sector".