Fiat to Sell Toro Insurance Unit to De Agostini SpA for $2.54 Billion

March 24, 2003

Fiat SpA, Italy’s financially troubled auto maker, has agreed to sell its Toro insurance unit to De Agostini SpA, an Italian publishing company, for a reported 2.4 billion Euros ($2.54 billion). The insurance unit had been valued by analysts at between $2.12 and $2.65 billion.

Fiat’s share of the European automobile market has experienced a sharp decline, and the company, in which General Motors has a 20 percent stake, has been losing an estimated 100 million Euros a month since October 2001, according to a report from Dow Jones Newswire. Its net outstanding debt was around 3.8 billion Euros ($4.03 billion) at the end of 2002.

The company has undertaken to sell a number of assets, including Toro, in order to raise cash. The sale to De Agostini is expected to reduce the debt by around $1.4 billion Euros ($1.48 billion). News reports quoted Fiat’s current CEO, Giuseppe Morchio, as indicating that although it was a significant sacrifice to sell off Toro it was nonetheless necessary “to reduce debt and sustain the development of the group.”

De Agostini is a private company, unlisted on the Italian Stock Exchange. It’s best known for publishing telephone directories, and made a great deal of money in 2000 when it sold the business to Telecom Italia. It currently operates Lottomatica, Italy’s biggest lottery, and reportedly outbid Unipol, another Italian insurer, and France’s Groupama to acquire Toro.

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