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How does Marchionne do it? Having paid precisely bupkis for a reorganized “allegedly good Chrysler,” the Fiat CEO is now set to earn his firm $35 million if the deal doesn’t go through. In court filings (via DetN), Chrysler has requested the break-up fee with the following mystifying justification. “Fiat appropriately is the recipient of the proposed breakup because it has pursued and funded all aspects of the Fiat transaction on behalf of purchaser and has itself agreed to substantial commitments for the use of its technology, platforms and distribution network in support of the Fiat transaction and the Fiat alliance.” While taxpayers take an $8B+ bath no matter what. Huh?
13 Comments on “Fiat Gets $35 Million Insurance on Its $0 Chrysler Investment...”
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That sort of breakup fee is peanuts in this realm. It would probably not pay for much more than Fiat’s outlay on lawyers, accountants and investment bankers to advise on this transaction. Which is not to say that Chrysler (i.e. you and me and every other U.S. taxpayer) should have to foot the bill.
But it’s revealing in its own way: Fiat apparently sees this Chrysler thing as so speculative that they can’t pin down an actual, substantial number as the breakup fee, apart from the outlay on lawyers. Usually, a breakup fee is at least notionally tied, somehow, to the expected net value that the buyer was hoping to derive from the consummation of the transaction. By requesting so low a number, Fiat is either saying that (a) they are not entitled to a breakup fee, because the bidding for Good Chrysler will be open and competitive and who knows who is really going to snag the prize (but really, who else is in competition for this thing?), or (b) they are not entitled to a breakup fee because acquiring Chrysler, even under the proposed terms, is not worth anything to them (more likely the case).
Another tube of Astroglide for the taxpayers, please!
So we are paying Fiat to take over Chrysler. Paying a lot. Can I have a free Compass or Dodge truck at least?
The only conclusion I can draw is that their executive team is a LOT smarter than our government reps or the Chrysler team. Although the bottom line is that the Fiat team is the only one at the negotiating table with some “skin” in the game. Everyone else is negotiating with OPM.
didn’t GM already pay Fiat $2 billion to “go away”. Now they’re back, just extracting more money from their US operations that don’t exist. It’s pretty impressive, really. Fiat hasn’t really been present in the US in three decades yet they have raked in billions of dollars and large assets from Americans, in one way or another.
I can honestly say that I will never buy a Chrysler product until our money is paid back. There is no way we should be footing the entire bill for this bailout and then basically transferring control to a foreign entity. The more this develops, the more maddening it becomes. At least GM will remain an American company when the smoke clears.
GS650G:
“So we are paying Fiat to take over Chrysler. Paying a lot.”
No we are paying very little. “Peanuts” as someone said. Remember GM/FIAT? And this is not Chrysler’s fault but the government. They ordered Chrysler to link up with FIAT or die, no choice in the matter.
Fiat has really outdone themselves here.
The $2 Billion from GM is nothing compared to what’s going on here.
First, go into business with Chrysler, pay nothing, get $8 Billion in US Taxpayer funds. Second, if it doesn’t work, get paid $35 million to go away.
The Mafia could learn from these guys.
“No we are paying very little. “Peanuts” as someone said. Remember GM/FIAT? And this is not Chrysler’s fault but the government. They ordered Chrysler to link up with FIAT or die, no choice in the matter.”
So why didn’t we shut down this monstrosity when we had the chance, again?
I took I gander at Fiat’s website, and I really don’t see anything that would sell over here. They’re taking the feds for a ride.
kowsnofskia : So why didn’t we shut down this monstrosity when we had the chance, again?
I don’t suppose it has anything to do with the campaign donations and votes bought from the UAW?
DEZ
PS this is not a slam of the present administration. BOTH candidates made promises to the UAW when they campaigned in Michigan. IMO this scenario would have played out regardless of presidential victor.
“The Mafia could learn from these guys”
I am sure that in Italian business, there is little difference between the Mafia and legitimate businesses. They work closely together.
DrivnEZ–
A Republican would bail them out because he’d be in hock to the suits rather than labor, I think.