Italian industrial group Fiat on Sunday agreed to accept 1.5 billion dollar from its partner General Motors in return for scrapping an option that would force the US giant to buy the Italian automaker, according to Italian media.

Fiat group agreed to the deal at a board meeting in Turin, Italian media reported on Sunday.

The meeting was led by Fiat CEO Sergio Marchionne, who returnedto Turin from New York where he had been in talks with GM Chairman and CEO Richard Wagoner.

Italian newspapers contained reports on Sunday that GM had offered Fiat at least 1.5 billion dollar to release it from a put option to buy the Italian group's loss-making car unit Fiat Auto.

Fiat sold 20 percent of Fiat Auto to GM in March 2000. The deal included a clause giving Fiat the option to sell GM the remaining 80 percent should the Turin group decide to sell it between 2005 and 2009.

GM has argued that the option is no longer valid after asset sales made by Fiat in the midst of a financial crisis.

The issue has been at the centre of a long-running dispute between the two companies. Insiders say Fiat originally wanted 3 billion euros to scrap the option. Last month, GM wrote off its stake in Fiat Auto to zero from 220 million dollars, taking the corresponding charge in the fourth quarter of 2004.

However, observers agreed that the problem for GM was not how much it would have to pay for Fiat Auto, but the fact that the Detroit automaker would be forced to assume Fiat Auto's 10.4 million dollars debt. If this were to be added to GM's own 291 million dollars debt, it would almost certainly result in a down grading of its credit rating to junk bond status, they said.

GM already had enough problems with its operations in Europe where sales are slumping and it has been forced to downsize its German subsidiary Opel, a Fiat rival in many sectors.

Source: Xinhua