Fiat Chrysler Automobiles (FCA) chief Sergio Marchionne reportedly said at the weekend 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.
A Reuters report noted that Marchionne is 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 on the sidelines of the Formula One Italian Grand Prix in Monza, northern Italy.
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Reuters said 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.
Marchionne said he had had a brief chat about his GM ambitions with Italian prime minister Matteo Renzi but added that while Renzi "may have his personal preferences, he's never expressed it".
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."
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By GlobalDataReuters noted GM repeatedly has said it prefers to go it alone. The automaker 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.
An earlier report, from Bloomberg, said Marchionne, though not known for his patience, was likely to wait until next year before making a bid for GM because the spin off of Ferrari, slated for early 2016, could be the catalyst to make his move. Ferrari’s separation would raise money for the debt-laden company while the move was also key for the Agnelli family, Fiat’s dominant shareholder, which is keen to keep control of the Italian supercar maker.
Marchionne has long argued automakers waste money by developing multiple versions of the same technology and so should merge, Bloomberg noted.
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. GM and Fiat also have a shared history, almost combining a decade ago until GM bought itself out of the deal. Marchionne’s persistent chatter is seen as part of the plan to prod GM into a combination, while GM’s position has been that it’s seeking savings internally and doesn’t need Fiat.
"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," Vincenzo Longo, a strategist at IG Group in Milan, told Bloomberg. “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, Bloomberg sources said. 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, told Bloomberg in a joint interview with Marchionne in October.
