14 February 2005
GM and Fiat have reached a settlement to terminate their 5-year partnership and realign their industrial relationship. Under the deal, GM will pay Fiat €1.55 billion and will return its 10% stake in Fiat. In exchange, Fiat gave up a put option to force General Motors to buy the unprofitable Fiat Auto. GM will also acquire an interest in key strategic diesel engine assets and other rights with respect to diesel engine technology and know-how.
The most significant elements of the settlement agreement are as follows:
- The Fiat-GM Powertrain (FGP) joint-venture company will be dissolved and GM will regain complete ownership of all GM assets originally contributed. During a transition period, FGP will continue to supply both companies;
- GM will co-own with Fiat key powertrain intellectual property, including the SDE and JTD diesel engines and the M20-32 six-speed manual transmission;
- GM will acquire a 50% interest in a new joint venture limited to operating the powertrain manufacturing plant in Bielsko-Biala, Poland, that currently produces the 1.3 liter SDE diesel engine;
- The GM-Fiat Worldwide Purchasing joint venture will be dissolved.
The companies will continue cooperation through long-term agreements to supply each other with powertrains, continued cooperative development of certain vehicle programs and through Fiat’s participation in GM’s purchasing alliance program, said GM.
Source: GM (press release)