Fiat Chrysler Automobiles (FCA) chief Sergio Marchionne reportedly said last weekend that seeking a merger with General Motors was a “high priority” and such a deal would also be the best strategic option for the Detroit rival.
GM’s board rejected a merger proposal from FCA earlier this year but that has not stopped Marchionne from wooing his bigger competitor.
He is reported to keen to reduce the number of players in the auto industry and share the prohibitive costs of building greener and more intelligent cars. “That discussion remains a high priority for FCA,” he was quoted as telling journalists at the Italian Grand Prix last weekend.
Although he did not want to discuss the next steps FCA might take or their timing but said a merger with GM would “be the best possible strategic alternative for us and for them. General Motors does remain the ideal partner for us and we represent a not easily replaceable alternative for them.”
Marchionne declined to comment on whether FCA would pursue a hostile bid for GM.
“I have zero comment on that issue. I’m not a good forecaster of the future when it comes to that,” he said.
He added he had not spoken to any GM shareholders about the issue but may have spoken to some of them by accident because of the companies’ overlapping investor base.
Addressing concerns that such a merger could mean job cuts, he said: “The implication of any tie up of that calibre would be absolutely zero on the manufacturing infrastructure of the two companies.”
For its part, GM repeatedly has said it prefers to go it alone. The carmaker said last week that remained the best strategy to create value for its shareholders, even after an in-depth review of a possible merger with FCA.
Marchionne has long argued automakers waste money by developing multiple versions of the same technology and so should merge.
He’s focused on GM because the two automakers share a multi-brand strategy and GM doesn’t have family shareholders to defend it like Ford.
“As a real poker player, Marchionne won’t settle for winning just one hand and getting Chrysler; he wants to go for the jackpot of merging with GM,” commented Vincenzo Longo, a strategist at IG Group in Milan. “He’s luring GM investors with talk of multi-billions in savings before making a final push.”
Fiat is committed to spinning off Ferrari and has no plan to include it in a deal. The supercar unit wouldn’t contribute to cost savings from a merger, and the Agnellis want control, the sources said. In contrast, the family is ready to have its 29% stake in Fiat diluted in a potential deal to expand the company, John Elkann, a descendant of Fiat founder Giovanni Agnelli and the head of the family’s business activities, commented.
© Irish Examiner Ltd. All rights reserved