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GM-Chrysler Merger Pitch Confirmed

by David Zatz on

John Elkann, chairman of Fiat Chrysler Automobiles and part of the founding family, told Reuters that CEO Sergio Marchionne did indeed send an email to General Motors and others about “a possible tie-up.”  The story was originally broken by the New York Times on Saturday, and was essentially dismissed by Sergio Marchionne.

Sergio Marchionne and Governor Granholm

Mr. Marchionne, possibly at the behest of Mr. Elkann, has been seeking to reduce FCA’s high capital expenditures by looking for merger or acquisition partners. As he said in an unusual speech during the last quarter’s investor’s report, the industry spends many billions of dollars developing essentially similar components, including engines and transmissions.

The former Chrysler already uses ZF transmission designs, along with its own legacy automatics for trucks and a Mercedes automatic for Wranglers.   GM and Ford are collaborating on a ten-speed automatic, Ford uses Toyota hybrid technology, and FCA is sharing a car design with Mazda, among other current deals. A tie-up would not necessarily mean a merger, though it appears that was the primary goal of Mr. Marchionne’s e-mails.

Mr. Marchionne may have been acting as an agent for Mr. Elkann and may not have been entirely enthusiastic about merging with General Motors, based on the fact that he used e-mail, rather than personal meetings, to broach the idea and to gauge interest.

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