Fiat Chrysler Automobiles NV Chief Executive Officer Sergio Marchionne is looking at other automakers as merger candidates as the chances of striking a friendly deal with General Motors Co. dwindle, said people familiar with the matter. We discussed this on the Car Pro Show last Saturday, and it is beyond me why Marchionne is so hell-bent on merging with another automaker.
Marchionne has been working with an advisory firm to gauge investor interest in pushing for a combination of FCA and GM and is also looking at other candidates due to the Detroit carmaker’s lack of interest. He and his advisers are eyeing other large automakers as “Plan Bs” and considering France’s PSA Peugeot Citroen as a fallback option, said two of the people, who asked not to be identified because the matter is private.
While Marchionne has not given up on the idea of luring GM to the bargaining table through shareholder pressure, his camp knows that they need to explore more options because GM CEO Mary Barra and her board have stonewalled him, the people said. Marchionne said that he prefers a friendly deal if he can get one.
“There is no doubt that the preferred route is to work through the corporate-governance system of companies and not to circumvent decision-making processes within companies,” Marchionne, 62, said.
Barra said before the company’s annual meeting that she received an e-mail from Marchionne recently and had her board review it. She said that the board isn’t interested in discussing a merger with FCA.
GM’s board sees a merger with FCA as a distraction from the company’s own efforts to build vehicles more efficiently and fix problems such as its money-losing Opel unit in Europe. Adding FCA’s troubled European operations and market-lagging U.S. car brands would set back the company’s progress by several years, said one of the people.
His first choice is GM, said the people. The world’s third-largest automaker behind Toyota Motor Corp. and Germany’s Volkswagen AG has a lot of scale and there’s a lot of overlap that could be consolidated. GM and Ford Motor Co. have said they aren’t interested.
Marchionne’s advisers are sizing up others.
Toyota Motor Corp. North America CEO Jim Lentz said the Japanese automaker has not been contacted by Fiat Chrysler Automobiles NV about potential mergers, and is not interested in consolidation with other automakers.
“It’s something we would not be interested in,” Lentz told reporters in a roundtable ahead of a groundbreaking at the Toyota Technical Center in York Township, Michigan. “At 10 million we have enough scale right now to do what we need to do. There really would be no advantage for us.”
Volkswagen remains a possibility, but only after options with GM have been exhausted, said people familiar with the plan. The problem FCA has with Volkswagen is that the German carmaker is used to getting full control of the companies it buys, whereas the Agnelli family that controls FCA doesn’t plan to sell its stake, said one of the people. They want to keep a diluted position in a new, merged company, the person said. In any case, VW reiterated last month that it isn’t pursuing any deals.
FCA could also approach automakers smaller than GM, such as Japan’s Mazda Motor Corp., Honda Motor Co., Suzuki Motor Corp. and Seoul-based Hyundai Motor Co. If all else fails, Marchionne would approach Peugeot, whose CEO Carlos Tavares is in the midst of a fix-it plan.
Tavares, who joined the Paris-based company last year, would want at least six more months to continue with his plan before entertaining any talk of a merger or alliance, two of the people said. He hasn’t said that he would be interested in a tie-up with FCA, they said.