Fiat SpA yesterday announced that it would merge its 90%-owned telecommunications transmission equipment subsidiary Telettra SpA with Compagnie the Alcatel Face SpA Italian subsidiary of Generale d’Electricite SA’s majority-owned Alcatel NV, retaining a 25% stake in the merged company. Telettra, which did $173m net on sales of $1,400m, will add significantly to the size of Alcatel and strengthen it in the battle with its two main European rivals, Siemens AG and L M Ericsson Telefon AB. Telettra does 48% of its business outside Italy and is particularly active in Spain, where Alcatel also has a substantial presence. The deal is part of a much wider collaboration between Fiat and CGE in which Fiat will take a 6% stake in CGE and CGE a 3% stake in Fiat. The French electrical and electronic conglomerate and the Italian carmaker also plan to form an equally-owned holding company to pursue other activities of interest to both companies – what areas will be explored is not yet specified. Fiat will also take a 50.1% stake in CGE’s car batteries subsidiary, and will sell 50.1% of its Ferrovia SpA railway rolling stock company to the GEC-Alsthom NV joint venture between GEC Plc and CGE.
