When at first you don’t succeed…
Fiat-Chrysler Automobiles, the Italian-Dutch-American automotive conglomerate that globally manages 162 manufacturing operations, 87 R&D centres, and maintains a network just short of 3,000 dealerships in North America alone, has sort of been listed for sale for the past couple of years. CEO Sergio Marchionne has made it clear on various occasions that FCA will be handed over to the right suitor for the right price, though the acquisition front has remained quiet for some time.
It seems however that things have been heating up lately, with sources coming forward to Automotive News that there has been long, fruitful discussions between FCA and a “well-known Chinese automaker,” ultimately ending in FCA rejecting the acquisition offer due to it being a little too light on price. It’s expected that this automaker will continue to do its due diligence and will likely return with another offer, given that the Chinese government is pushing large corporations within the country to expand outwards, and has pushed through incentives and programs to make large foreign acquisitions easier.
It hasn’t been made clear to Automotive News by its sources which automaker was involved, and neither FCA nor the various Chinese auto-conglomerates are talking. It’s said that there has been independent identification of executives from various Chinese automakers making their rounds around FCA, with executives from both parties making trips to China and Auburn Hills, Michigan (where FCA is headquartered) in a bid to push through a takeover.
While Marchionne has ensured that FCA is seen as up for grabs, it’s been clarified by a source that the takeover would not include historic Italian brands Maserati and Alfa Romeo, both of which would be spun off (like Ferrari was) to maximise profit for Exor, the holding company that owns a controlling stake in FCA, which in turn is controlled by the industrious Agnelli family. The motivations behind the acquisition are simple: The Chinese have long coveted the lucrative North American market, and what better way to break into that market than to take over the company that controls two quintessentially-American brands (Jeep and Ram, namely)?
After what Geely did to Volvo since its takeover in 2010, China has been pressuring its various automotive manufacturers to look beyond its borders to expand the reach of China’s industrial boom. Almost $2-billion is expected to flow out of China to facilitate takeovers like these within the next decade or so, as they enjoy the complete and total backing of the leadership in Beijing. This is something that Marchionne is certainly banking on, with comments from him going as far back as 2015 making clear that he’s had China on his mind.
During this period, FCA was actively looking for manufacturing partners within the industry, having been rejected by Volkswagen and in talks with GM. When asked about Asia, he responded by saying, “I don’t think Asia is partnerable. No, you can be acquired by the Asians. I think China will buy you.”
Stay tuned to CarShowroom as we bring you the news as it comes.
