Fiat pulls out of Opel talks

Fiat will not attend today talks with the German government about its offer for Opel, blaming Berlin’s “unreasonable” funding demands.

The Italian car maker stressed, however, that it was not withdrawing its bid for General Motors’s European unit.

Fiat CEO Sergio Marchionne said in a statement that a requirement that Fiat provide Opel with emergency funds while the government decided the timing and conditions of bridge financing, would expose the Turin-based company to “unnecessary and unwarranted risks”.

Because today’s meeting would focus specifically on emergency funding for Opel, Marchionne said Fiat would not be attending the talks.

Marchionne took part in marathon talks in Berlin with German officials, including Chancellor Angela Merkel, that ended Thursday without a result after GM officials said the company would need €350m in immediate funding.

Marchionne said it was “unreasonable” to expect Fiat to provide such funding because it had not yet had full access to Opel’s financial records and could not determine “its precise financial condition and thus properly frame a merger proposal that would be fair” to both sides.

“The emergency nature of the situation cannot put Fiat in a position to take on extravagant risks. We have already offered to contribute our auto business assets to the merger on a debt-free basis and thus provide substantial ... equity to the merger.”

Fiat’s assets would generate money which would “stabilise the performance of the combined entities during the integration and restructuring process,” he said.

Taking over GM’s European operations, including Opel and Britain’s Vauxhall, is a key part of Marchionne’s strategy of creating a car company with the capacity to produce six million cars a year, the threshold he says is necessary for a carmaker to survive. Fiat is on the verge of taking control of a 20% stake in Chrysler, pending the completion of bankruptcy procedures in New York.

Fiat said “it remains open and committed” to continue discussions regarding Opel.

It has not released details of its offer, although Marchionne has said about 10,000 jobs in GM Europe would be on the cutting block.