Fiat’s vice president and the heir to the Italian auto empire confirmed on Tuesday that the company is in talks with U.S. carmaker Chrysler, news agencies said, and Fiat shares were suspended amid media reports of a possible partnership with the U.S. company.
John Elkann, a member of Fiat’s founding Agnelli family, as said “it’s no mystery we are talking, we have been talking for a while.”
Elkann did not give details on the negotiations, saying that more information would come from the upcoming statement and a Fiat board meeting on Thursday.
Under terms of a pact that is being worked out, Fiat is likely to take a 35% stake in Chrysler by the middle of this year, the Journal reports, citing people familiar with the matter. It would have the option of increasing that to as much as 55%.
Fiat wouldn’t immediately put cash into Chrysler, the Journal reports. Instead it would obtain its stake mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models to be sold in the U.S., these people said. Fiat also would provide engine and transmission technology to help Chrysler introduce new, fuel-efficient small cars.
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