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FCA to Attempt Hostile Takeover of GM?

by Bill Cawthon on

In today’s edition of Il Sole 24 Ore, the Italian financial newspaper, Andrea Malan reported Bernstein analyst Max Warburton’s claim that Fiat Chrysler Automobiles could mount a hostile takeover of General Motors.

A cash offer is out of the question, Warburton wrote in a note released today, but FCA CEO Sergio Marchionne could offer a stock-for-stock deal. Warburton says the idea is “beyond ambitious” but points out that stranger things have happened in the equity markets.

Hostile-Takeover-Web

Mr. Marchionne is unlikely to get a favorable response from GM. GM CEO Mary Barra presented Marchionne’s e-mail to GM’s board of directors in a recent meeting and the idea of merging with or buying FCA was rejected.

Hoping to gain some leverage, Mr. Marchionne has approached the financial markets to persuade a hedge fund or an activist like Harry Wilson to get involved. Wilson led the group that forced GM’s board to approve a multi-billion-dollar stock buyback program.

Should Marchionne ultimately give up on GM, his options are  limited. Ford has already said “No” and it’s almost impossible for FCA to win an equity war unless he already has the Ford family on his side. Volkswagen is most likely out because the folks in Wolfsburg don’t merge: they own or control. This would be unacceptable to the Agnelli family, which wants to retain a large, if diluted, ownership position in any merger.

Allpar readers are almost united in their opposition to Fiat Chrysler merging with anyone. Considering the response from the other automakers, they’re in good company.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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