• Matteo Licata

The Untold Story Of Ford's Failed Takeover Of Alfa Romeo

Alfa Romeo's history spans over a century, yet it ceased to exist as a corporate entity almost four decades ago, following Fiat's 1986 takeover. But Fiat wasn't the only option on the table: this is the untold story of Ford's attempt to buy Alfa Romeo...


Quite a few older, hardcore Alfa fans still consider anything designed afterward as somewhat unworthy of the badge. However, I believe that, even though things could certainly have gone better, plenty remains to be happy about in the last few decades.


Yet Alfa Romeo's recent history could well have gone down a very, very different path: welcome to the untold story of Ford's attempt to buy Alfa Romeo, back in 1986.


The Context

Alfa Romeo had been under the control of the Italian state conglomerate IRI since 1933. By the late 1960s, under the inspired leadership of Giuseppe Luraghi, Alfa Romeo had become a small yet moderately profitable specialist manufacturer that successfully rode the wave of new money generated during Italy's post-war economic boom.


However, due to several external and internal factors, the company's financial situation deteriorated quickly during the 1970s, during which Alfa Romeo lost ever-increasing amounts of money and sunk more and more into debt, despite the sales success of the Alfasud and Alfetta.


The winds of change

In the early 1980s, while Alfa's management and technical staff fought a valiant battle for survival on a shoestring budget, the Italian political and social landscape was changing. With the neoliberalist ideas spreading from the US and the UK, the role that the state should or shouldn't play in Italy's economy was increasingly called into question.


By 1985, when Alfa Romeo celebrated its 75th anniversary, it became painfully clear that the herculean effort to renew the product line and increase productivity wasn't yielding the desired results: sales remained well below expectations, and yet more billions were lost.


Facing the uncertain future and disappointing financial results of Alfa Romeo, many at the top of IRI's hierarchy began asking whether it made any sense for the state to remain involved in the fickle, non-strategic automobile business.


In short, privatization was no longer taboo, and by the summer of 1986, news broke of ongoing negotiations with Ford.

Ford's interest in taking over Alfa Romeo became official by the end of September 1986, when it officially presented an offer valid until November the same year.


Ford's plan

The American giant intended to buy a 20% stake in Alfa Romeo, with the option to acquire a majority stake within the following three years and further options to complete the takeover five years after that.


Ford planned investments roughly equivalent to around 4 billion of today's dollars between 1987 and 1992, with the target of producing up to 400.000 cars in Alfa Romeo's factories by '94: 350.000 Alfas and 50.000 Fords. According to these plans, Alfa Romeo's return to profitability was envisioned for 1990.


The Alfas that never happened

A fascinating glimpse into what the first products of Alfa Romeo under Ford could have been are mentioned in a rare book written by the late Domenico Chirico, then one of Alfa's top product development engineers.


The 164 saloon was then in the final stages of development at Arese, and apparently, Ford was interested in creating an eventual Scorpio replacement model from it, to be launched by 1989 in saloon and wagon form. Given the 164 was based on a Fiat platform, this would have required reaching a deal with Fiat regarding the use of certain components, but it was a minor hurdle.


Similarly to what eventually happened in real life, the then-new 75 was to soldier on until 1992 to be replaced by a new front-drive model, but it would have been based on Ford underpinnings. Alfa's old twin-cam inline-four engines were to be replaced by units based on the Ford Zetec 16-valve engines then under development, but likely with Alfa-specific cylinder heads.


Interestingly, the 33 hatchback not only would be maintained, but it would have spawned some intriguing Ford-badged derivatives, including a coupé and a convertible, all powered by Alfa's boxers.


Fiat's counteroffensive

Watching the negotiations between IRI and Ford progressing towards a very likely deal must have triggered the red alert in Fiat's top management offices.


Ford's entry into Alfa Romeo's capital was likely seen as an existential threat to the Fiat group, which scrambled to present a counteroffer to the Italian government in late October of '86.


Fiat proposed an immediate and complete takeover of Alfa Romeo, including around 70% of its debt burden, for the equivalent of 1.2 Billion dollars of today, plus a commitment to invest around six between 1987 and 1995.


The Ford and Fiat offerings were too different to be directly comparable. Still, it's easy to see why the Italians ultimately prevailed. By buying the whole shebang, Fiat relieved the state from investing additional money into Alfa Romeo over the following years and the associated risks.


Contrary to what I've heard many enthusiasts say, the terms of the Alfa Romeo's sale to Fiat were considered fair by European authorities. Those considered illegal under EU law were the around 700 million (actualized figure) the Italian state used to save Alfa Romeo from insolvency between 1985 and 1986.


Epilogue

Fiat's offer was accepted on the 6th of November 1986: Alfa Romeo ceased to exist as a corporate entity by the end of the same year, and, as they say, the rest is history...




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