Over the past 24 hours, pundits and analysts have penned thousands of column inches criticizing General Motors (NYSE:GM) for its ill-fated marriage to Italy's Fiat (NYSE:FIA), a marriage that has now ended five years after it began. Shareholders from coast to coast are undoubtedly also calling for the head of GM's CEO, Richard Wagoner, for his decision to throw $2 billion at Fiat, in addition to the $2.4 billion GM had already flushed down that hole.

As we all know by now, GM agreed yesterday to extricate itself from the union with Fiat that was consecrated in 2000, the same year that Wagoner took the reins at GM. What may have been forgotten over the intervening years, however, is exactly how GM convinced itself that hitching its team to money-losing Fiat and its perceived edge in diesel engine technology was a good idea. To put things in perspective, here's a brief review of the history of this doomed venture.

It was March 2000, nearly three months before Wagoner was promoted from chief operating officer to chief executive officer. All around the world, carmakers were doing deals. Ford (NYSE:F) had bought Volvo in 1999 and would soon purchase Land Rover from BMW. Daimler had purchased Chrysler the year before. GM's CEO at the time, Jack Smith, was presiding over deals all over the globe, allying with Japan's Isuzu, Suzuki, and Subaru. Italy's Fiat, meanwhile, was looking for a "big brother" to help keep its money-losing car unit afloat.

Fiat was already in talks with Germany's DaimlerChrysler (NYSE:DCX) about an alliance that would involve sharing technology and setting up joint ventures. Problem was, DaimlerChrysler didn't want just a partner. It wanted to buy out Fiat in its entirety. That proposal didn't sit well with Fiat's management, which preferred GM's offer to acquire just a 20% ownership stake in Fiat. In exchange, GM paid Fiat $2.4 billion worth of GM stock -- equivalent to about $1.15 billion at GM's current share price. GM also agreed to buy out the rest of Fiat's equity at Fiat's option, if the auto industry started going to pot and if Fiat felt it was unable to continue driving solo. Analysts at the time opined that this "put option" was a deal breaker, that Fiat wouldn't have gone with GM without this escape clause.

In retrospect, GM probably shouldn't have agreed to Fiat's final term -- or, indeed, to partner with the money-losing Italian concern at all. As it turned out, the deal utterly failed to strengthen GM's position in the world, and it cost GM shareholders dearly in the process. But bad as GM's decision was, the company deserves to have it viewed in light of the competitive pressures of the day.

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Fool contributor Rich Smith holds no position in any of the companies named in this article.