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Fiat and Chrysler create alliance Fiat and Chrysler create alliance
(about 2 hours 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 Chrysler. In return, the US firm will get access to Fiat's 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.
It is hoped the agreement will lead to "substantial" savings for Chrysler.It is hoped the agreement will lead to "substantial" savings for Chrysler.
It is one of two Detroit-based carmakers to have received emergency US government loans. The United Auto Workers union (UAW) welcomed the deal, saying it could help preserve US manufacturing jobs.
"Fiat has been very successful in executing its own restructuring over the past several years," the statement said. "[The alliance] offers Chrysler new opportunities to compete in the US market and the global marketplace," UAW president Ron Gettelfinger said in a statement.
Who gets whatWho gets what
This initiative represents a key milestone in the rapidly changing landscape of the automotive sector Sergio Marchionne, Fiat Group chief executiveThis 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:Under the terms of the deal Chrysler will get:
• Access to Fiat's environmentally friendly vehicle technologies and components• Access to Fiat's environmentally friendly vehicle technologies and components
• "Substantial cost savings opportunities"• "Substantial cost savings opportunities"
• Access to Fiat's distribution network in "key growth markets" outside the US and its global supplier base.• Access to Fiat's distribution network in "key growth markets" outside the US and its global supplier base.
In return, Fiat will receive:In return, Fiat will receive:
• Access to Chrysler's distribution network and suppliers• Access to Chrysler's distribution network and suppliers
• A 35% equity stake in Chrysler.• A 35% equity stake in Chrysler.
The statement points out, however, that the agreement does not commit Fiat to funding Chrysler in future.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.
After the announcement was made and trading in Fiat shares resumed, they rose 3.5%.
Recent troublesRecent troubles
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.Carmakers around the world have seen their sales plummet amid the ongoing global economic slowdown.
In recent months both Fiat and Chrysler have been in the news, with Chrysler receiving billions of dollars in government help and Fiat saying it needed a partner because it was too small to continue on its own. Chrysler has received an emergency loan from the US government worth $4bn, while Fiat has said it needed a partner because it was too small to continue on its own.
Fiat chief executive Sergio Marchionne said the deal represented "a key milestone in the rapidly changing landscape of the automotive sector".Fiat chief executive Sergio Marchionne said the deal represented "a key milestone in the rapidly changing landscape of the automotive sector".
Chrysler chairman Bob Nardelli said that the alliance "creates the potential for a powerful, new global competitor".Chrysler chairman Bob Nardelli said that the alliance "creates the potential for a powerful, new global competitor".
The completion of the deal is subject to approval from regulatory authorities, including the US Treasury.
Trading in Fiat shares had earlier been suspended amid speculation of a possible partnership with the US firm.
After the announcement was made and trading resumed, Fiat shares rose 3.5%.
Also on Tuesday, German carmaker Daimler said it was still interested in selling its 20% stake in Chrysler.