The chairman of Fiat Chrysler Automobiles, John Elkann, confirmed that his company’s CEO, Sergio Marchionne, had sent an email to his counterpart at General Motors, Mary Barra, requesting for a merger between the two automakers.
Earlier this week Automotive News reported that Marchionne approached Barra via email in March this year.
In the email, Marchionne made the case for a merger based on cost efficiencies and scale. Barra and her fellow GM executives were not convinced by his argument and rebuffed the offer.
When asked on Thursday, US time, about the veracity of the report, Marchionne replied simply that he writes “lots of emails”.
Today, though, in comments made to Reuters and other members of the press, Elkann confirmed that the Marchionne had sent an email request for a merger. He continued, “It was not the only email, it was not the only conversation”.
When reporters asked if he would support a hostile merger with another car maker, Elkann stated the he would “act with determination if there are the prerequisites to do something that makes sense”.
Above: Sergio Marchionne (left) and Mary Barra (right).
In terms of market capitalisation, Fiat Chrysler (FCA), at US$20.7 billion ($26.9 billion), is less than half the size of General Motors, which is valued at US$59.7 billion ($78 billion). FCA is also a long way behind the industry heavyweights Toyota, worth US$236 billion ($308 billion), and Volkswagen, valued at US$105 billion ($137 billion).
Since the knock back from GM, Marchionne has gone on the public record about the need for consolidation amongst the car making fraternity.
In a call with financial analysts in late April, Marchionne said, “It is absolutely clear that the amount of capital waste that’s going on in this industry is something that certainly requires remedy”.
John Elkann is not only FCA’s chairman, but also a representative of the Agnelli family that has controlled Fiat for decades. The family’s company, Exor, controls around 30 percent of Fiat Chrysler’s stock.
Elkann told reporters that he and his family would not be an “impediment” if there was a deal that was in the best interests of Fiat Chrysler.