GM, Fiat Reach Settlement Agreement

GM, Fiat Reach Settlement Agreement 
 
                        Master Agreement Is Terminated 
 
                    GM Preserves Diesel Engine Capability 
 
                   Joint Cost Savings Expected to Continue 
 
    DETROIT, Feb. 13 -- General Motors Corp (NYSE: GM) and Fiat 
S.p.A. (NYSE: FIA) today announced they have executed an agreement to 
terminate the Master Agreement between the companies and realign their 
industrial relationships.  The boards of directors of both GM and Fiat have 
approved the settlement agreement. 
    GM will acquire certain strategic assets from Fiat to assure the future 
availability of a full range of diesel engines for vehicles produced by GM's 
global operations. 
    'GM and Fiat have agreed that it is in the best interest of their 
companies and shareholders to terminate the Master Agreement,' said GM 
Chairman and Chief Executive Officer Rick Wagoner.  'GM has derived 
significant benefits from its association with Fiat Auto, including the 
accelerated development of diesel engines, cost savings and the joint 
development of certain vehicle programs.  With this settlement, our overall 
financial returns will have been favorable. 
    'We believe that we have reached a fair and equitable agreement that 
enables both companies to maintain a high level of synergy savings, but in a 
more focused approach that gives each of us more freedom to act in today's 
competitive environment,' Wagoner said. 
    Under terms of the agreement, GM will pay Fiat 1.55 billion to terminate 
the Master Agreement (including the put option) and to acquire an interest in 
key strategic diesel engine assets, and other important rights with respect to 
diesel engine technology and know-how.  GM will return its 10 percent equity 
interest in Fiat Auto Holdings to Fiat S.p.A. 
   
    The most significant elements of the settlement agreement are as follows: 
     * The Fiat-GM Powertrain (FGP) joint-venture company will be dissolved  
       and GM will regain complete ownership of all GM assets originally  
       contributed.  During a transition period, FGP will continue to supply  
       both companies so that their respective operations will not be  
       disrupted; 
     * GM will co-own with Fiat key powertrain intellectual property,  
       including the SDE and JTD diesel engines and the M20-32 six-speed  
       manual transmission; 
     * GM will acquire a 50 percent interest in a new joint venture limited to  
       operating the powertrain manufacturing plant in Bielsko-Biala, Poland,  
       that currently produces the 1.3 liter SDE diesel engine;  
     * The GM-Fiat Worldwide Purchasing joint venture will be dissolved. 
     * The companies will continue to generate joint cost savings in several  
       key areas, including: 
          -- Long-term agreements to supply each other with powertrains; 
          -- Continued cooperative development of certain vehicle programs; 
          -- Through Fiat's participation in GM's purchasing alliance program. 
 
    GM will take an after tax charge to earnings of approximately US $840 
million or $1.49 per fully diluted share.  
 
SOURCE  General Motors Corp 
    -0-                             02/13/2005 P 
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