Chrysler's days are numbered if it doesn't get more money from the federal government. It is sliding slowly into an abyss and will need a lot of money simply to stay afloat.
Meanwhile, Fiat shows up as another white knight. For no money down, Fiat wants 35 percent of Chrysler in exchange for technology, platforms and general all-around help. Later, Fiat would have an option to pick up an additional 20 percent of Chrysler, giving it control and about 55 percent of the company for a cash infusion of $25 million — that's "million" with an "M."
That means the Italians will have equity, the Germans may still have equity and, of course, Cerberus, too.
And they want the U.S. government to fund this marriage of equals or whatever.
If Fiat and Cerberus think the U.S. government will continue to fund Chrysler, they don't understand the mood of the government today. Chances are more likely that the U.S. government will ask Chrysler to repay the earlier loan.
The risks to Chrysler's dealers and suppliers and the company itself are huge, and the injection of Fiat into this mess is doing nothing but muddying the already muddy waters.
It doesn't matter what Fiat brings to the party. Sergio Marchionne is a smart CEO, and he has done a great job bringing Fiat back from the brink. Now he's trying to pick up Chrysler for peanuts in an environment in which his tactics will be viewed with great skepticism.
Chrysler is kidding itself and its dealers if it thinks the U.S. government will look kindly on this financial deal. Fiat is trying to get control of Chrysler for $25 million, a bargain beyond belief.
Fiat claims it will give Chrysler technology and platforms worth billions. Perhaps so. But since no one else has offered Fiat a single euro for them, the value seems to be zero.
Chrysler will need billions more to take advantage of Fiat's offer, on top of the huge cost of staying alive until products based on Fiat platforms are introduced in the U.S. market.
If Fiat wants to get into the U.S. market, it will have to invest plenty, perhaps even its own stock.
Otherwise, it's simply a shell game, one that Chrysler and U.S. taxpayers can't win.