Fiat-Chrysler CEO Sergio Marchionne is still pushing for what he sees as an inevitable merger with General Motors, despite months of rejected meetings and ignored phone calls.
-The man in the black sweater hit hard in a recent must-read interview with Automotive News, claiming that combining with the world’s second-largest automaker could generate $30 billion a year in revenue, or roughly $5 billion more than what both companies earn separately. Marchionne first proposed the idea in March through a direct e-mail to GM CEO Mary Barra. The GM executive said any meeting would be a “distraction” and that GM has been “merging with ourselves.”
-“You may reject the deal but you can’t reject the discussion,” Marchionne said. “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.” Marchionne said that while he has “obviously made some arbitrary assumptions about which architectures survive, which engines survive,” he has looked at every plant and car and has a lot of graphs proving his point.
-“Look, the combined entity can make $30 billion a year in cash. Thirty. Just think about that [expletive] number,” he said.
-GM has not publicly commented about the potential deal since Barra publicly commented on Marchionne’s overtures in May. Former GM chairman Bob Lutz has gone on record as the resident devil’s advocate within the industry, and he fully supports the merger. “I was always in favor of GM acquiring Chrysler, and I honestly think it would deserve a serious look now. You would get synergies . . . which would be massive,” he said. Lutz was at GM when it considered buying out Chrysler in 2008.
-Marchionne has been hunting for a “partner” particularly to bolster Fiat, which itself merged with Chrysler shortly after the Detroit automaker filed for bankruptcy in 2009. Marchionne was the mastermind in that deal, grabbing company stock for next to nothing, shedding dealers, paying back Chrysler’s government loans, and infusing cash into Auburn Hills. But instead of propping up both companies, the resultant Fiat-Chrysler is lopsided. Chrysler and its American brands are soaring while Fiat and its Italian brands (save for Ferrari) slump overseas.
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- Why GM’s Mary Barra Swiped Left on Sergio Marchionne’s Merger Proposal
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- Why Investors Aren’t Excited About Fiat-Chrysler’s NYSE Listing
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- The Quotable Bob Lutz Weighs In on Marchionne’s Merger Dreams
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Fiat-Chrysler’s NYSE listing last fall failed to attract significant investment, and Marchionne—since announcing an aggressive five-year plan to boost sales 60 percent—is under pressure to grow while facing high pension costs in the U.S., fighting slim market share in Europe, and playing catch-up in China. The Ferrari IPO, expected to net several billion sometime this quarter, will help. But in Marchionne’s eyes, it’s not enough. “I tell you that you can make X billion more by being together, I guarantee you that I can carry half the market,” he said.
-from Car and Driver Blog http://ift.tt/1igCeNy
via Agya
