An interesting development is happening at Michigan head quartered Fiat Chrysler Automobiles as CEO Sergio Marchionne looks at an agenda that would maximize value for the Angelli family through its holding company Exor.
The industry’s best or worst kept secret is that FCA has recently declined an acquisition offer from a Chinese brand, but more bids are reportedly coming from China for the prized brands like Chrysler, Dodge, Jeep, Ram and Fiat.
It’s no secret that cash-rich Chinese companies are looking at profitable foreign acquisitions to ensure fast track entry into global markets under the country’s ‘China Outbound’ policy.
Whether FCA will be sold as a complete entity or broken up, we can’t say for now, but FCA did send a delegation to China to talk with Great Wall Motor executives recently. And there are reports also that Chinese business executives travelling to FCA’s headquarters in Auburn Hills, Michigan for talks. The nature of the meeting and what was the subject of talks is still not known and hence it remains speculative for now.
According to one corporate source close to the affairs of FCA has indicated that, if any sale were to happen, it would involve FCA’s highly profitable Jeep and Ram brands, as well as Chrysler, Dodge and Fiat, but would exclude Maserati and Alfa Romeo. The fate of those two brands would be considered separately and at a later date.
Marchionne’s business strategy with Ferrari has been extremely successful. Ferrari’s current market capitalization is closed to US$20 billion, which is $2 billion more than FCA’s. Market watchers believe that Jeep could be worth far more than that and suggest that Marchionne’s success with the Ferrari IPO could be influencing his current thinking. Over a year ago, Marchionne unsuccessfully lobbied for General Motors to merge with FCA in 2016, but that was before Ferrari shares took off in 2017.
Will Marchionne surrender FCA in full or part to the Chinese? Well, it’s going to be a wait and watch game now and there are other considerations too. A sale deal would almost certainly raise political eyebrows in North America since the company was rescued by taxpayer money in 2008.