GM Gets Out of Albatross Option Amid Fiat Restructuring
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| After only 6 months at the helm Fiat's young CEO Gabriele Galateri di Genola (55) is resigning. Co-CEO Paolo Fresco (69) will stay on for an indefinite term. |
Fiat S.p.A. was expected to announce the resignation of its two co-CEOs, Paolo Fresco, 69, and recently appointed Gabriele Galateri di Genola, 55, yesterday, but instead only announced that Galateri would be stepping down. A special board meeting is set for tomorrow, Thursday, to decide Galateri's successor. Fresco will be staying on for an undetermined time.
This latest move represents only part of a sweeping reorganization that will also cancel General Motors' obligation to take the helm of Fiat Auto. In the new deal GM will give up its right of first refusal on the sale or transfer of Fiat assets in exchange for Fiat Auto canceling a put option that would have required GM to purchase the remaining shares of Fiat Auto it doesn't own, beginning in 2004. The financial outlay for the remaining 80% ownership of the Italian company doesn't make sense for the American giant, especially considering its own struggling European brands Opel and Vauxhaul, its current need to invest in North American destined products as well as its global financial challenges. The deal will leave GM's powertrain development partnership and cooperative components purchasing opportunities with Fiat Auto in place.