Fiat Chrysler CEO again pushes merger with GM

31 Aug 2015 | Author: | No comments yet »

Fiat Chrysler CEO fans flames of GM merger in report.

Sergio Marchionne, CEO of Fiat Chrysler Automobiles, said the potential profits and savings that would result from a merger with General Motors are too big for the rival automaker to ignore. Marchoinne, in a story published Sunday evening by Automotive News, asserts that a merger between the two automakers could generate up to $30 billion annually in earnings before taxes. Since then, Barra has said both publicly and privately the Detroit automaker has no interest in exploring the idea. “We already have scale and we are leveraging that scale,” Barra said in June. “When you look at the last several years we have been merging with ourselves.” By mid-summer, it appeared that Marchionne was backing away from the idea — at least in the near future. Marchionne stopped short of saying he is pursuing a hostile deal with GM but said the automaker’s board and executives cannot avoid a discussion of the potential cost savings. “Not hostile,” he told the publication. “There are varying degrees of hugs.

After we completed a thorough review of a possible merger with FCA, we concluded that executing our current plan is the best way to create value for GM stockholders,” GM said in an emailed statement Sunday. I don’t have enough capacity today, why would I do it?” Marchionne said in July. “(A merger) has zero to do with distribution, zero to do with brand structure and nothing to do with anything. If your distribution networks are different, why do you need to go kill brands?” Marchionne’s pursuit of GM became public shortly after he presented Wall Street analysts with a presentation he called “Confessions of a Capital Junkie.” In it, Marchionne argued that the automotive industry consumes billions of capital investment annually at a rate that exceeds most other industries.

And, Marchionne argued, the pace of that capital consumption will increase in the coming years as automakers work furiously to develop new infotainment technology, meet stricter environmental regulations, develop alternative fuel vehicles and technology for autonomous vehicles. Mergers between automakers must occur, Marchionne concluded, to cut costs and survive — even though auto sales in the U.S. will exceed 17 million new cars and trucks this year and GM and Ford are recording record North American profits. In August, Exor reached an agreement to acquire PartnerRe, a global reinsurance company, for $6.9 billion after launching an unsolicited bid for the company earlier in the year that overcame a existing bid from another company.

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