General Motors has flatly rejected the advances of its crosstown rival, Fiat Chrysler Automobiles, but FCA CEO Sergio Marchionne is not going away — not by a long shot.
Marchionne says he has sweated the details and done the math and discovered there’s far too much upside in a merger of FCA and GM to let a deal go undone, or at least unexplored.
In a blunt, two-hour interview with Automotive News in his downtown Detroit office, Marchionne said the numbers come out so good that his board of directors has no choice but to put pressure on GM to begin discussions now.
“It would be unconscionable not to force a partner,” he said. That sounds like a hostile takeover bid is in the works.
“Not hostile,” said the FCA chief. “There are varying degrees of hugs. I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you. Everything starts with physical contact. Then it can degrade, but it starts with physical contact.”
GM insiders, speaking with anonymity, question Marchionne’s assertions about synergies and suggest a merger with FCA is a bad idea all around.
“Why,” asked a high-ranking GM executive, “should GM bail out FCA?”
Marchionne says the logic of the deal is “irrefutable.” “We’re not talking about marginal improvement in margins,” he said, “we’re talking about cataclysmic changes in performance, just huge.”
He said: “I’ve gone through product by product, plant by plant, area by area, and I’ve analyzed them all.
“I’ve obviously made some arbitrary assumptions about which architectures survive, which engines survive, and the only deal that offers them the same benefits as we potentially get … is us.”
The potential profits, he says, are exponentially larger than the current combined global earnings of GM and FCA.
Marchionne says GM isn’t taking his phone calls.
“I’ve offered to sit down with them and take them through the numbers,” said the Italian-Canadian CEO. “They won’t listen. That kind of abject refusal to engage … the capital markets won’t understand why you are rejecting the discussion. “You may reject the deal but you can’t reject the discussion. If you’re refusing to talk to me, and you have seen nothing, you either think you’re above it all, or you think the capital markets are full of schmucks that owe you something.”