Detroit (ots/PRNewswire) -
- Master Agreement Is Terminated
- GM Preserves Diesel Engine Capability
- Joint Cost Savings Expected to Continue
General Motors Corp (NYSE: GM) and Fiat S.p.A. (NYSE: FIA) today
announced they have executed an agreement to terminate the Master
Agreement between the companies and realign their industrial
relationships. The boards of directors of both GM and Fiat have
approved the settlement agreement.
GM will acquire certain strategic assets from Fiat to assure the
future availability of a full range of diesel engines for vehicles
produced by GM's global operations.
"GM and Fiat have agreed that it is in the best interest of their
companies and shareholders to terminate the Master Agreement," said
GM Chairman and Chief Executive Officer Rick Wagoner. "GM has derived
significant benefits from its association with Fiat Auto, including
the accelerated development of diesel engines, cost savings and the
joint development of certain vehicle programs. With this settlement,
our overall financial returns will have been favorable.
"We believe that we have reached a fair and equitable agreement
that enables both companies to maintain a high level of synergy
savings, but in a more focused approach that gives each of us more
freedom to act in today's competitive environment," Wagoner said.
Under terms of the agreement, GM will pay Fiat EUR1.55 billion to
terminate the Master Agreement (including the put option) and to
acquire an interest in key strategic diesel engine assets, and other
important rights with respect to diesel engine technology and
know-how. GM will return its 10 percent equity interest in Fiat Auto
Holdings to Fiat S.p.A.
The most significant elements of the settlement agreement are as
@@start.t1@@ - 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 so that their respective operations will not be
- GM will co-own with Fiat key powertrain intellectual property,
including the SDE and JTD diesel engines and the M20-32 six-speed
- GM will acquire a 50 percent 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 to generate joint cost savings in several
key areas, including:
-- Long-term agreements to supply each other with powertrains;
-- Continued cooperative development of certain vehicle programs;
-- Through Fiat's participation in GM's purchasing alliance program.@@end@@
GM will take an after tax charge to earnings of approximately US
$840 million or US$1.49 per fully diluted share.
Web site: http://media.gm.com
ots Originaltext: General Motors Corp
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