Fiat nearly went bankrupt on a car business that burned €1B a year

For a century Fiat was Italy's industrial flagship, but by the late 1990s its car division was in trouble. Weak models, quality problems and too many brands left Fiat Auto unprofitable. By 2000 it was burning through more than €1 billion of cash a year, and the group carried roughly €5 billion in net liabilities.

Needing a lifeline, Fiat struck a deal with General Motors in 2000: GM bought 20% of Fiat Auto for $2.4 billion, and the two set up joint ventures. Crucially, Fiat also won a put option — the right to force GM to buy the rest of Fiat Auto. It was an unusual clause, and it became Fiat's most valuable asset.

Fiat's crisis deepened through 2002 to 2004 and the group came close to collapse. When Fiat later moved to exercise the put, GM refused, arguing that a recapitalisation that had halved its stake to 10% had invalidated the option. The two sides headed for court.

In February 2005 they settled. GM paid Fiat €1.55 billion (about $2 billion) to terminate the agreement — cancelling the put, unwinding the joint ventures and returning its 10% stake. The cash and the freedom to restructure on its own bought Fiat time; under Sergio Marchionne, who took over in 2004, the carmaker returned to profit and later acquired Chrysler.