Fiat SpA’s founding family is weighing a capital increase of about €2 billion ($2.58 billion) with an eye to a possible merger with France’s PSA Peugeot Citroen, an Italian daily reported.
The capital increase by the Agnelli family’s Exor holding company would aim at keeping a significant stake in a merged company, La Repubblica said on Thursday without citing sources. The Agnellis have about 30% of Fiat through Exor. Shares in Fiat, Europe’s sixth-biggest car maker by unit sales, were down 3.15% at €4.31 at 0902 GMT. PSA was up 7.12% at €13.855 as the DJ Stoxx auto index was 1.23% firmer.
The news comes two days after Fiat announced an alliance with US automaker Chrysler LLC. Fiat and Exor declined comment. A PSA spokesman also had no comment apart from saying the French car maker’s priority was to come out of the crisis gripping the car industry.
Fiat and PSA are Europe’s leaders in small cars which have low carbon dioxide emissions and are suited for city traffic. Italy’s Il Sole 24 Ore business daily also reported on Thursday that Fiat has been working for a month to obtain a syndicated credit line of up to €5 billion.
Italian banks UniCredit SpA and Intesa Sanpaolo are willing to subscribe a total of €1-1.5 billion, it said without identifying its sources. “Peugeot’s market cap is currently €3 billion and a complete takeover by Fiat could be financed with the rumored €5 billion loan,” UniCredit debt analyst Sven Kreitmair said in a morning note. “A combined Fiat-Chrysler-Peugeot group would be the third largest auto company in the world after Toyota and GM with a total production of 8.8 million vehicles (2007 figures),” he said.
Fiat and PSA have been working together since 1978 and have two joint ventures, making vans and multi-purpose vehicles in the north of France and central Italy. They also teamed up with Tofas for a car factory in Bursa, Turkey.
PSA also has cooperation deals with Ford Motor Co, Germany’s BMW and Japan’s Mitsubishi Motors Corp. CEO Christian Streiff has said he wants to deepen the existing partnerships rather than add new partners. Fiat is scheduled to report Q4 and full-year results later in the day. Analysts expect Fiat to miss slightly its profit target for 2008 despite slightly higher sales. (Reuters)