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Fiat approached General Motors for an European alliance but rebuffed.

Discussion in 'Fiat Global News' started by ghodlur, May 26, 2015.

  1. asimpleson

    asimpleson Esperto

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    Such hostility will of course not be tolerated without blessings of bigwigs within political circles within the US. Already the takeover of Chrysler is still not assimilated a news for some patriotic people there and is also therefore under very minute scrutiny of industry observers over there.

    Mitsubishi and Mazda are also two prospective alliance partners considered as marriage proposals for FCA. Mitsubishi could apparently as per one article offer a 'priviledged' position to FCA esp. in ASEAN regions should the latter think of such a move as per this report. Although to gain a dominant position in India it needs Suzuki, and Suzuki needs FCA access for US where its non-existent. Although Mazda could probably be an easier option for a take-over, it does not offer much for Marchionne's target sales figures under FCA, and also does not complement the portfolio of vehicles already under the group.
    prabhjot likes this.
  2. prabhjot

    prabhjot Esperto

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    @asimpleson

    Suzuki will also get: a risk-diversification out-of-India, and huge technology synergies with both Fiat and Jeep? Access to 'premium/luxury' brand-value and sales/profits-share, always much more bankable than small cars. Of course they're a touchy, Japanese family-firm!

    Mazda's out, although they have the Fiat 124 Spider (Miata-based) project on currently with FCA. They've just tied up pretty comprehensively with Toyota. Also, they're useless for breaking into (not that FCA profits from either country are neglible) India and China+ASEAN.

    Mitsubishi are rumoured to be cooperating (very early stages) with FCA for the platform etc of the next Lancer (Evo). FCA distributes Mitsubishis in Mexico, and will soon start distributing under the Fiat Professional badge the L200 pickup (known to us in SUV form as the Pajero Sport) in both LatAm and Europe, possibly even the US.

    It seems the GM thing may just be gaming, serious of course, on Marchionne's part, because of the upcoming and potentially debilitating UAW trade union contract negotiations for not just FCA but also GM, and Ford too. The idiotic, right-wing American system makes pension and health care benefits so dependent on employers that the notorious UAW will push really hard, after all the sacrifices made by them during the bankruptcy proceedings.

    It is probably Peugeot Citroen, and/or Suzuki and/or Honda (currently loss-making, no premium brands etc) and/or.......(I'd wish!) Tata Motors-JLR.

    How this plays out will be fascinating, especially in the backdrop and the urgency caused by the global economic permanent-turbulence-crisis, of which both India and China too are a central part.
    asimpleson likes this.
  3. asimpleson

    asimpleson Esperto

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    I almost edited my last post but it timed out. :( Never mind, I now know how astrology and prediction must work.. :D ;)
    I was so keen on mentioning why Fiat must consider Peugeot, which could be a welcome takeover given the French automaker's status. Infact its now rumoured that an alliance could be round the corner. Except it will also again need blessings from the French powers although agreed its not as sensitive as some foreign entity taking over Dassault.
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  4. prabhjot

    prabhjot Esperto

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    http://www.thestreet.com/story/1319...n-possible-merger.html?puc=yahoo&cm_ven=YAHOO

    Marchionne is NOT a mere headline grabbing, quote-dropping+workaday ceo.

    Even the implausible sounding 'hostile takeover bid' for gm may not be entirely unrealizable, or unreal.

    This guy's not merely smart, he's a guy with insight, with vision,.....a chain smoking, poker playing, ferrari driving intellectual of a businessman: perfectly americano-italian, actually.
  5. prabhjot

    prabhjot Esperto

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    http://www.autonews.com/article/201...e-squeeze-on-gm-gms-response-why-bail-out-fca

    Marchionne sounds in this interview given just a day or two ago to a very respected and serious automotive-business journalist/website like he's planning a "hostile takeover" attempt of GM, soon!

    Presumably in alliance with one or more hesdge fund investors, not to mention EXOR itself?

    GM is NOT family or promoter owned, and is run by career 'bureaucrats': it has a wide and dispersed shareholding pattern, and is a serious underperformer in financial terms, and with a management that is regarded as thoroughly insipid by the capital markets and investors and analysts, whatever its current health thanks to its size in the US and in China, and thanks to the very very charitable terms of their bailout of bankruptcy back in 2008 (pretty much a taxpayer loss of, it is said, 50 billion dollars), unlike FCA which got a vastly more burdensome deal from the US government.

    Marchionne claims in this interview that the synergistic savings are upto 30 billion dollars in all. He sounds deadly serious about this, probably feeling that the global economic situation and the severe over capacity/over competition as well as currency-movements etc make such a big consolidation imperative, for long-term health and 'return of the cost of capital over the business cycle' which he's been insisting, with nobody disagreeing, is something hardly any automaker manages to do currently (esp outside of the most premium brands).
    asimpleson likes this.
  6. prabhjot

    prabhjot Esperto

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    It is being very strongly rumoured among serious folk in the US financial as well as automotive industry that no less than Warren Buffett has aligned himself with Marchionne's attempt to do a hostile-takeover of GM or at least force GM's management into doing a big-enough cooperation/consolidation deal(s) with FCA, EXOR/Agnelli-s and Marchionne.

    It is a safe bet that since Marchionne has spoken so openly and aggressively/threateningly about GM Management's recalcitrance and un-reason, repeatedly including just a few days ago, that BIG financial-investor-capital-market pressure will soon be brought to bear on GM, with Marchionne leading the 'cavalry' as it were!
    --- Double Post Merged, Sep 5, 2015, Original Post Date: Sep 5, 2015 ---
    http://www.autonews.com/article/201...t-gm-merger-plan-may-wait-for-ferrari-spinoff

    The stock price movements of GM and FCA, relative to overall automotive stocks as well as the overall stock market in the US clearly is suggesting more and more investors betting on some-sort-of-merger-type deal, hostile or not, between Marchionne etc and GM.

    It is rather likely that GM management will try share buybacks to make any share buying by FCA/EXOR+allies more expensive, if they are not doing so already: they are late declaring their dividend by several weeks, a strange occurence given their decent revenue and profit numbers.

    What makes Marchionne's moves plausible is the strong likelihood of some of GM's already-existing and already-influential-on-its-board investors (eg., Warren Buffett) putting pressure on GM management, from within, as it were.

    The whole exercize is premised on the widely-recognized superiority of Marchionne personally as a leader, ceo/chairman, especially when it comes to inter- or multi-national mergers, as proven by his record integrating FCA's American brands with the European ones. Also, his capital-allocative-efficiency reputation is very very high, as is his reputation for multiple-brand-management, and his deep experience in other industries esp in purely financial-cum-legal affairs via his vice-chairman-ship of EXOR, the Agnelli family holding company.

    This last, under his leadership, is in a very very strong position financially, and has recently concluded as many 4 very big deals, two purchases including a hostile takeover of PartnerRe, where too the latter's management ended up getting by-passed by its shareholders who chose to go-with EXOR/Marchionne's offers and promises/reputation, and two highly profitable sales. EXOR also bought 47odd % of The Economist for 500 million odd euros, a few weeks ago.

    A LOT of action is to be expected on the whole GM-merger front.

    Whether other (alternate? fall-back?) deals are also being worked on by Marchionne/Elkann/FCA(Suzuki? Tata Motors including JLR? Magneti Marelli sale?...) is another interesting question.
    asimpleson likes this.
  7. asimpleson

    asimpleson Esperto

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    Meanwhile US automotive followers in their comments continue to show contempt for Marchionne. With one commentor calling him "pepe le pew" of automobile company CEOs. Something that one could not ignore and is downright funny. :hilarious: Of course with all the due respects to Sergio Marchionne. Maybe everyone still thinks in GMs case he is trying to "bite more than he can chew". Me sincerely like him for his attitude and the fact that everyone is watching him as he is trying to making global shifts happen.

    http://jalopnik.com/fiat-chrysler-ceo-says-he-hasnt-given-up-merging-with-g-1727682864

    @prabhjot, with your acumen or affinity to these things you could be much more valuable an asset to some giant financial enterprises or those dealing in Capital Markets. Don't know precisely what converts to considerable money for you with this kind of market analysis. Hope it does. To be totally read as a compliment. :)
    Last edited: Sep 5, 2015
  8. prabhjot

    prabhjot Esperto

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    If I could buy fca stock in India, I would! I have not a doubt that Marchionne's a very 'winning horse'!:cigar:
    He's won many races already, big ones, with this, the biggest one in prospect over the next year or two.

    A lot more 'winning' than some of the other stocks I've invested (rather small amounts) in, here.:hungover:

    Of course, am hoping the FCA-Suzuki share-swapping type endless rumours have some realism to them, too. Don't see why he would not be trying to do more than one 'deal' (buying, selling, merging, cooperating, share-swapping, JV-ing)?

    Surely just as he sees synergies with GM in Europe and LatAm and China let alone the US, he cannot possibly be ignorant of the essentiality of making-it in India, something likely possible only with and via Maruti imo, and/or Tata, for FCA, hardly on their own, even with Abarth, Jeep, Maserati, etc high-margin brands. Though a GM-FCA-Tata concert in India would also be a HUGEly potent future force with which to prise open this market from the tight-fists of the Japs and the Korean.
    --- Double Post Merged, Sep 6, 2015, Original Post Date: Sep 5, 2015 ---
    http://www.wsj.com/articles/fiat-scions-strategy-toward-gm-patience-1436224474

    John Elkann/Agnelli's quotes on the GM-merger attempt, from several months ago.
    Last edited: Sep 5, 2015
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  9. prabhjot

    prabhjot Esperto

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    Marchionne has in the past week flown to Brazil for a meeting with the Brazilian president, finance minister etc, as also had a meeting with PM Renzi of Italy.

    It is clear that this has very much to do with doing the 'political' preparatory work for a (hostile?) bid for GM, on a global basis, but possibly centred less on the US and more on LatAm, Europe (Opel/Vauxhall and Fiat) and China+India? Anti-trust/competition law issues, labour union short-term job loss/rationalisation issues, in the case of Brazil and Italy with government money being more or less directly invested in FCA plants/companies/tax-subsidies, etc.

    Meanwhile Opel marketshare in Europe is slipping, despite all-new cars (growing, unlike Fiat+Jeep, slower than market-average), and GM's long and great China boom/bumper profits are slipping what with the longer-run slowdown in that (car) market/economy. GM is notable in Brazil and Mexico, and unlike Fiat, strong in the western S American markets, tiny though they are (Andean): Chile, Columbia, Peru etc. BUT: it loses money in S America, and has huge over capacity, as it does in India too.

    GM's attempts to break into the luxury/sports car markets with Cadillac are a loss-making failure, 0 in Europe, negligible and stagnant in the US, a few in China, alongwith Buicks in China, and that is it.

    i.e., GM is very vulenerable to their current shareholder dissatisfaction with heavy under-performance in, and excessive dependence on pickup truck and suv sales, in the booming US market. The US market performance of their sedans, big and small, is not that great, though profitable.

    With GM's China cinderella sales and profits story receding with the long term slowdown there, where they have invested very very hugely, including just recently......their share price is set to underperform FCA's (and other firms') and they will likely be vulnerable to activist-investors led by Marchionne, very likely aligned with one or more big current shareholders (e.g., Warren Buffett himself who owns 3% of GM). Early next year?
    rusticnomad and asimpleson like this.
  10. prabhjot

    prabhjot Esperto

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    http://www.autonews.com/article/20150921/OEM/309219950/is-there-a-side-door-into-fortress-gm

    The author of this piece, Larry V., is a very old-hand, very respected, specialist reporter and analyst of all matters F'C'A usa (former and current).

    Who knows, but we will likely start seeing the next, post-rhetorical-preamble, moves by Marchionne soon, i.e., just as soon as the FCA balance sheet shows all the beefing-up effects of the booming sales growth+expanding profit margins of FCA in N America, to go with the continuing and set-to-accelerate global JEEP sales growth (new plant already churning out the Renegade in Brazil with more to come soon, new plant for JEEPs starting up in China in 2-3 months' time......) and the big one: the 2-2.5 billion$ net gain to the FCA balance sheet thanks to the spinoff of Ferrari and the 10% ipo, etc.

    In about 6-8 odd months' time.

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