Opel and Fiat

So Fiat has expressed interest in Opel. Never mind what anybody with the slightest M&A experience knows: 90+ % of "expressions of interest" lead nowhere. And never mind that Marchionne is also negotiating with Chrysler, and it seems rather unlikely that Fiat can do both things. He probably just prefers to have two balls in the air instead of just one. That's always good for your negotiating position.

What I fail to understand is this: The unions and the SPD immediately start shouting: "No way! Not with Fiat!". Their reasoning: Fiat and Opel produce similar cars. So there is obvious potential for efficiency gains, which would lead to job losses and possibly factory closures.

Well, isn't that the point? When a company has problems being profitable, and the problems are so bad that its whole survival is at stake, what you do is: You look for a way to cut costs, and to improve economies of scale. A Fiat-Opel merger would make perfect sense from that perspective.

What would be the alternative? A financial investor running Opel on a stand-alone basis? Adding value... how exactly? Yeah, sounds very promising.

In addition, the unions fear that jobs will go to Italy. Opels coming out of Southern Italian factories, with German factories getting closed. According to the FTD, Opel's Gesamtbetriebsratschef (boss of workers' council) Klaus Franz said: "Fiat would take out a sharp pencil and make calculations as to which factories have to be closed. We would have to suffer for Fiat's sins."

Not quite sure why this should be the case: As Fiat doesn't exactly have money to burn, it would presumably assess the various factories by merit (isn't that what even Franz himself said: They would use a sharp pencil to make their calculations!). If Opel's factories pass the test, why would they be closed down?

Plus, with all the government guarantees and high political profile of the whole thing, they'd be crazy if they didn't make sure to properly spread the pain. Sure there would be cuts at Opel, but there would have to be cuts everywhere anyway.

There is no ideal solution for Opel. But it seems to me that a merger with Fiat would be the lesser of various evils.