TURIN, ITALY – Italy's Fiat Group has confirmed plans to acquire an initial 35 percent stake in Chrysler LLC, providing Fiat the scale it needs to survive, and allowing Chrysler to expand its product portfolio to include small, less-polluting cars.

In a joint statement, Fiat, Chrysler, and Chrysler's majority shareholder Cerberus Capital Management L.P, said they have signed "a non-binding term sheet to establish a global strategic alliance."

Chrysler said the deal, which involves no cash investment and is supported by the United Auto Workers, formed a key component of plans to secure its future, and would grant it access to Fiat's more fuel-efficient vehicle platforms, engines, and transmissions.

According to press reports, Fiat will have an option to boost its stake to 55 percent at a later date.

Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities, as well as management services supporting Chrysler's submission of a viability plan to the U.S. Treasury as required. The alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.

The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler's restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler's long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury.

Chrysler CEO Bob Nardelli also said the partnership would "provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country, and building renewed consumer confidence, while preserving American jobs."

The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.

Merger Facts

Here are some key statistics about the two groups:

FIAT

• Key car brands are Fiat, Lancia and Alfa Romeo.

• Also owns luxury sports car makers Ferrari and Maserati.

• Has a market capitalization of about $7.5 billion.

• Trading profit for the entire group including Iveco trucks and CNH tractors was 802 million euros ($1.04 billion) in the third quarter on sales of 14.3 billion euros, up from 13.9 billion a year earlier.

• Main markets are Europe and Brazil. Nearly all of the profit for Fiat Auto comes from Brazil.

• Founded in 1899 and steered from 1902 by Giovanni Agnelli whose grandson Gianni, chairman from 1966, was a legend of Italy's corporate scene, known as much for his society lifestyle as his business acumen.

• Has struck a series of alliances with other manufacturers, including India's Tata and China's Chery.

• In 2000, in the midst of a debt crisis, Fiat struck a deal with General Motors in which the U.S. car maker took a stake. The agreement was dissolved in 2005.

• Current CEO Sergio Marchionne took over in 2004 and put in place a plan to turn the automaker around which was successful, but the company has suffered like others in the current global crisis.

CHRYSLER

• Founded in 1925.

• Best-known models include Dodge, Plymouth and Jeep.

• Bought by Germany's Daimler in 1998 in a $36 billion deal.

• Daimler sold 80.1 percent of Chrysler in 2007 to Cerberus Capital Management LP for $7.4 billion.

• Daimler retains a 19.9 percent stake which it said on Tuesday it still wanted to sell. It has been in talks with Cerberus about the stake.

• In October, Chrysler held merger talks with GM.

• Chrysler has taken $4 billion from the U.S. government as a loan to help it cope with the current global crisis and has also received $1.5 billion for its finance arm.