Chrysler LLC will give Fiat S.p.A. an initial 35% equity interest in Chrysler in return for access to Fiat’s vehicle platforms, powertrain, and components technology, as well as distribution and management services, Chrysler said after the two companies signed a non-binding term sheet to establish a global strategic alliance. Fiat will not surrender any cash as a result of the deal.

The alliance is meant to be a key element of Chrysler’s viability plan, as lenders, employees, the United Auto Workers, dealers, suppliers and Chrysler Financial are all expected to contribute to the company’s restructuring effort, Chrysler said. Completion of the alliance is subject to due diligence and regulatory approvals, including by the U.S. Treasury.

“The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offerings, a field in which Fiat is a recognized world leader while benefitting from additional cost synergies,” said Sergio Marchionne, CEO of Fiat Group.

"A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing," said Bob Nardelli, chairman & CEO of Chrysler LLC.