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Fiat Chrysler Calls for Mega-Merger

Fiat Chrysler Calls for Mega-MergerFiat Chrysler Calls for Mega-Merger

Fiat Chrysler Automobiles Chief Executive Officer Sergio Marchionne intensified his call for an automotive mega-merger this week.

Consolidation needs to happen soon as the industry pours €2 billion ($2.2 billion) a week into developing new cars, Marchionne said in an interview Saturday at The Council for the US and Italy. Potential partners, including General Motors Co., have previously snubbed his advances.

“Intelligent people would agree that a remediation of that waste is useful,” he said. “The faster you do it, the better it is.”

Marchionne is pushing the auto industry to consolidate in order to share the cost of developing new technologies such as increasingly autonomous cars and more efficient engines. His pleas have fallen on deaf ears at other manufacturers, as rosy US and European sales numbers leave carmakers feeling less pressure to restructure. Both GM and Ford Motor Co. have indicated they’re not interested.

The outspoken CEO appealed directly to investors after meeting skepticism from executives. He cited the 2-billion-euro weekly figure for development costs in an April 29 presentation for analysts.

He said on Saturday he would still prefer to discuss a deal at the board level.

Marchionne’s search for a partner comes amid a push to boost Fiat Chrysler deliveries by more than half to seven million cars in 2018. To finance that target, Marchionne plans to sell a 10-percent stake in Fiat’s Ferrari unit this year and distribute Fiat Chrysler’s remaining 80 percent holding in the sports-car maker to current investors at the beginning of 2016.

Originally planned for the end of June, the Ferrari initial public offering now won’t happen before mid-October because of a tax ruling, Marchionne said on Friday. The delay is not linked to merger talks, Marchionne said.

If Fiat Chrysler does find a willing partner, he said he would consider remaining as CEO past his announced 2018 departure date.

 

Financialtribune.com