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.
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By GlobalDataUBS adds that while details remain undecided, it views governments as ‘increasingly helpful as they seek sustainable solutions’.
