Fiat Chrysler Automobiles chief Sergio Marchionne is reportedly considering his next move after an overture, earlier this year, to General Motors for a merger was rejected.
Sources have told Bloomberg that Marchionne is considering alternate options after being privately and publicly rejected by the General.
A few days ago, Mary Barra, CEO of General Motors, confirmed that she had received an email from Marchionne earlier this year requesting a meeting to discuss a merger between GM and FCA. After internal discussion, the company decided that its own plans would yield better gains.
“For the past few years, we’ve been merging with ourselves. We have scale and we’re leveraging that. We’re focused on that and not the other,” she told Bloomberg and other news outlets ahead of the company’s annual general meeting.
Above: FCA board members at the company’s listing on the New York Stock Exchange in October 2014. Sergio Marchionne is third from the left.
One option, reportedly being considered, would be to initiate talks with another manufacturer. Volkswagen and Peugeot are being talked of as the most likely candidates. Ford has gone on the record to state that it’s not interested in any merger activity, while Peugeot is busy with its own restructuring plans at the moment.
Rumours of discussions with Volkswagen appeared last year, but eventually came to nothing. Part of the problem, the business publication believes, is that the only situation Volkswagen would consider would be a full buyout, and full control, of the Italian-American company. The Agnelli family, which holds a controlling stake in FCA, would rather that the two company’s merge and that they retain a diluted stake in the new entity.
A deal in Asia seems to be off the table as many of the big names, such as Toyota, Honda and Hyundai, prefer to go it alone, while smaller players already have links elsewhere. Carlos Ghosn, CEO of Renault and Nissan, told Bloomberg that he prefers alliances over mergers.
Another possibility being mulled over is convincing an activist investor to buy into GM, and have them agitate for a merger with FCA. Marchionne would need to convince any activist investor that it could make a quick capital gain when GM buys out FCA.
The FCA boss could also court large institutional investors, who recently pressured GM into initiating a share buyback scheme, although he has yet to do so. A long shot option would be for FCA to mount a hostile, probably shares-only, takeover of GM.