Contrary to a common market prediction, last month Fiat Auto walked away from an agreement signed in 2000 that allowed it to put the company to General Motors, with €1.55 billion in its pocket.
The pay-off is to terminate GM's 10% stake in Fiat Auto. Fiat will receive €1 billion from GM immediately and another €550 million within 90 days of the break-up of the two companies' power-train and purchasing joint ventures. GM will also have to take an after-tax charge of $840 million to account for the agreement.
This is not just a bitter pill to swallow for GM but also a major disappointment for its advisory banks. The master agreement Fiat signed with GM in 2000, which stated the put conditions, said...
