...and eyes up Fiat bid

THE ducking and weaving of the major car manufacturers as they try to buy up the medium-sized car companies of the world seems to be coming to a head with strong suggestions that DaimlerChrysler is going to buy a 70% shareholding in Fiat Auto, the car-making division of the huge Italian industrial combine. The deal being discussed is believed to include the Fiat, Alfa Romeo and Lancia brands but not Ferrari, nor its subsidiary Maserati. These would be retained by Fiat.

The logic behind the deal is that DaimlerChrysler needs expertise in the small-car sector of the market. It has failed to achieve anything in talks to date with Peugeot and Honda. Fiat produces the Punto, which is Europe's best-selling car, and a merger with DaimlerChrysler would create the second largest car manufacturer behind General Motors. The rumors of an alliance resulted in frenzied share trading in Europe last week and eventually the Agnelli Family issued a statement denying that a deal was imminent.

It is worth noting that the company's financial performance has improved recently but it still needs considerable restructuring which it cannot do because of the strong Italian unions.

Speculation last week suggested that Ford might make a bid for the company in order to stop DaimlerChrysler acquiring Fiat.

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