By William Schomberg
MILAN, Dec 31 (Reuters) - End-of-year tale or early warning of a mega-deal to rescue Italy's struggling Fiat ?
Reports that takeover expert Roberto Colaninno has an eight billion-euro plan for Europe's once biggest carmaker were splashed across Italian newspapers on Tuesday, suggesting the long-running battle for Fiat's future could soon take a new turn.
The man who stunned investors with his raid on Telecom Italia in 1999 had previously been seen by market watchers as being interested in Fiat. And the holiday season rumour mill has been revved up by reports of Colannino's purported plans, first mooted on the website of newspaper La Repubblica on Monday, along with comments by Prime Minister Silvio Berlusconi that Italian businessmen might come to Fiat's aid.
A spokesman for Colaninno on Monday said he would not confirm or deny the story.
La Repubblica said Colaninno's plan saw eight billion euros ($8.4 billion) being pumped into Fiat's battered car division Fiat Auto making him a shareholder in the group on a level with the Agnelli family which has controlled Fiat for over a century.
Colaninno would contribute one billion euros of his own cash with the rest raised by sales of key assets, a capital increase and possibly from Fiat's partner General Motors Corp .
The help from GM would be in return for an agreement by Fiat to drop its option to sell the rest of ailing Fiat Auto to the U.S. carmaker from 2004, La Repubblica said -- a possible relief the Detroit-based giant.
On Tuesday, other newspapers published similar stories, quoting unnamed sources. Corriere della Sera said Fiat's creditor banks were understood to be "cold" on the plan while financial daily MF reported the entrepreneur would soon meet with Fiat Chairman Paolo Fresco.
A Fiat spokesman declined to comment. On Monday, a GM spokesman declined to comment on the carmaker's intentions toward Fiat.
But financial sources said a move by the Colannino was a possibility in 2003 as the Turin-based group tries to dig itself out of a crisis which last week saw it downgraded to "junk" status by Moody's.
"All the hypotheses are out there. Who knows whether one of them will actually happen," said one of the sources.
COLANINNO GETS WHAT HE WANTS
Fabrizio Barbero, a fund manager with Gestielle, said Colaninno had proved he could boost efficiency at Telecom Italia. That was before Colaninno himself was ousted in a takeover in 2001 which left him sitting on a pile of cash.
"It's certainly possible," said another fund manager Roberto Bianchi, with Banknord in Milan. "Someone who managed a takeover at Telecom Italia could certainly do it at Fiat. It's in the personality of the man to get what he wants."
But it remained to be seen whether Colaninno, a former tax clerk with a passion for hunting and antiques, could win over the Agnellis who control Fiat with 30 percent of its shares.
La Repubblica said Umberto Agnelli, head of the family's holding companies, was worried about a break-up of the group and Colaninno was prepared to sign a pact on future selloffs.
Expectations he was plotting big moves came to the fore when he created a new investment vehicle in November.
His name also was linked by some market players to a block trade of 2.1 percent of Fiat's ordinary shares on Monday at 30 percent above market prices although his spokesman denied any involvement.
The entrepreneur also has powerful friends in the form of Mediobanca , the Milan investment bank. Its hand was seen behind a showdown in Fiat's boardroom earlier this month, when the group's chief executive, Gabriele Galateri, quit.
On Tuesday, Colaninno attended a board meeting at Mediobanca along with Fiat's Fresco, another board member. Both left without talking to reporters.
BERLUSCONI'S BLESSING?
Fiat spent 2002 in crisis, making slow progress in selling assets to cut debts and failing to stem a fall in car sales.
Its shares on Monday touched their lowest level in nearly 20 years and lost about 56 percent of their value during 2002. Italian markets were closed on Tuesday. Having already laid off thousands of workers this year and with more layoffs due in 2003, the crisis has attracted the attentions of Prime Minister Berlusconi who has often said he wants Fiat to remain Italian and recently met Colaninno.
On Monday, he added to the speculation by saying: "There are groups of entrepreneurs who have shown interest...there is the possibility of a positive response in this sense."
But market watchers said a move by Colaninno could take time. "I am a bit sceptical about what is still press rumour," said fund manager Barbero. "There are too many interests in Fiat for something like this to be wrapped up so simply."