Investment bank UBS has said in a research note that it is increasingly confident ‘that the proposed merger of Fiat Auto and GM Europe is gaining acceptance among politicians and unions in Germany’.
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UBS calculates that with 17% market share and little overlap the two groups could generate ex-growth synergies of EUR4bn.
The analysts at UBS say that ‘execution risk is high’ but that their review of past (largely failed) auto mergers shows ‘the problem was a flawed strategy (size instead of scale), not cost execution’.
The note goes on to say that the proposed Fiat-GM Europe merger ‘is exactly what is required to reduce the duplication of invested capital plaguing the industry’.
‘We see more scope for market share gain than loss,’ UBS says.
UBS adds that while details remain undecided, it views governments as ‘increasingly helpful as they seek sustainable solutions’.
