GM Buying A Fifth Of Fiat

General Motors Corp., the world's largest automaker, is taking a 20 percent stake in Italy's Fiat SPA in exchange for $2.4 billion in stock -- equivalent to 5.1 percent of GM.

The partnership announced Monday was expected to open up international markets for both automakers.

In a statement, the companies said the partnership would focus on Europe and Latin America. They expect annual savings to reach $2 billion within the next five years.

The deal covers Fiat's Alfa Romeo and Lancia brands. It does not include Fiat's other companies, Ferrari and Maserati. The deal will include joint ventures in purchasing, engine development and auto financing.

As part of the agreement, the Detroit-based GM has the first right to bid on the rest of Fiat Auto if Fiat decides to sell in the future.

The deal is subject to approval by U.S. and European Union regulators.

The alliance has already received the blessing of the country's major union confederation, CGIL.

CGIL's leader, Sergio Cofferati, told the Rome daily La Repubblica that the reported deal would be "a turning point which is good for the Italian economy."

Fiat, the world's seventh largest automaker and Italy's largest private employer, has seen sales slip over recent years, and there has been speculation that it would be acquired or merge with a non-Italian partner like GM or Germany's DaimlerChrsyler AG.

Its share of the Italian market, once 60 percent, has dwindled to 39 percent as competition eroded its dominance. In 1998, Fiat claimed only 11 percent of car sales in Western Europe.

Fiat is controlled by the Agnelli family, but Gianni Agnelli, Fiat's honorary chairman, recently acknowledged that the company, which makes Alfa Romeo, Maserati and Ferrari sports cars, was on the lookout for international partners.