Fiat stock is dropping over the concerns of Chrysler

Posted on Thursday, 22 January 2009 , 11:01:25 byEmil

Filed under fiatstockchrysleru.s.FiatChrysler

Fiat stock is dropping over the concerns of Chrysler

The stock of Fiat dropped to the lowest point now in 24 years on Borsa Italiana exchange of stock in Milan over analysts’ ideas about the carmaker’s planned mix with Chrysler LLC. So, Fiat fell to 4.21 Euro, the lowest mark since 1985 January 2, amid fears Fiat would absorb losses of Chrysler having no quick reward.

“Terms of the alliance imply some ‘option’ value but minimal operating benefits,” Philippe Houchois + UBS analyst said to the press. Analysts think that the plan of Fiat acquiring 35 Chrysler % will be yielding no fast reward, even it the Italian carmaker would not actually pay cash for the share. The concerns that Fiat, that recently emerged back from its own mode of restructuring, would not focus on the core Italian merchandise are rampant on Milan, London even NY.

“The initial market read is that [Fiat CEO Sergio] Marchionne has struck a ‘free call option’ on Chrysler’s future, with little or no downside,” Morgan Stanley the analyst Adam Jonas said. “However, we would encourage investors to consider Fiat management’s time and attention and indirect expenditures it will likely incur.”

This partnership, finalized by April hopefully , would help see Fiat get access to substantial networks distribution for Chrysler in North America, this in exchange to giving Chrysler the platforms for manufacturing small and fuel-efficient autos, a specialty of Fiat.