Fiat failed to reach an accord in negotiations with GM

&to=http:// english.pravda.ru/comp/2002/06/14/30335.html' target=_blank>Fiat SpA, Italy's largest manufacturer, failed to reach an accord with &to=http:// english.pravda.ru/comp/2002/09/25/37203.html' target=_blank>General Motors Corp. on an option to sell its unprofitable auto unit to the world's biggest carmaker, setting up a possible court battle. Fiat's shares plunged.

The Turin, Italy-based company said in a faxed statement the option is valid from today through July 24, 2010. GM, which bought 20 percent of Fiat Auto and granted the option in 2000, disputes the agreement because of changes Fiat made in the auto division, said Tony Cervone, a spokesman for the Detroit-based &to=http:// english.pravda.ru/comp/2002/11/22/39819.html' target=_blank>carmaker. Fiat Chief Executive Sergio Marchionne has pushed for a cash settlement to help save Fiat Auto, which has had 12 straight quarters of losses. GM, which lost $742 million in Europe last year and has written off its $2.4 billion Fiat investment, might face a downgrade of its debt to junk if the option is enforced, reports Bloomberg.

Italian Economy Minister Domenico Siniscalco said that "the two sides must be left to negotiate". Social Affairs Minister Roberto Maroni said that he continued to expect an agreement to emerge, commenting that a court dispute would be "a disaster".

Sergio Chiamparino said: "The town is unhappy with the lack of an agreement between Fiat and GM which would have enabled the company to recover resources to invest in new development projects.

"I hope that there is still room for new negotiations and that it will not end in a legal dispute," he added, informs the Turkish Press.

JB