Boomerang put

2 January 2003 By Rob Cox Follow @rob1cox

According to an old SEC filing, in a Fiat takeover, the US carmaker could actually force Fiat to buy back its 20% of Fiat Auto. This suggests any bidder, such as Robert Colaninno, would face a huge potential contingent liability that might hinder takeover plans.

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Context News

Roberto Colaninno is pursuing a plan to acquire a controlling stake in Fiat and launch a turnaround of the moneylosing Italian industrial conglomerate, according to people close to the Italian financier.

Colaninno, who successfully acquired Telecom Italia three years ago in an audacious bid, would invest up to E1bn of his own cash into Fiat, and jettison assets worth about E4bn. He would concentrate efforts on reviving Fiat Auto, while retaining the Iveco trucks arm and CNH farm and industrial equipment business.

The financier would need the assent of the Agnelli family, whose companies own 30% of Fiat and its banks, who have pledged E3bn of loans as possible equity. Fiat was last week downgraded to junk status by Moody's Investors Service.

On Monday, Prime Minister Silvio Berlusconi said he hoped Italian interests would come to the rescue of Fiat, the money losing industrial conglomerate and the country's largest private employer.

Berlusconi said: there are groups of (Italian) entrepreneurs who have shown interest…there is the possibility of a positive response in this sense, Reuters reported.

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