DETROIT SHAKEUP? Fiat-Chrysler boss pushes a General Motors merger

Sergio Marchionne, CEO of Fiat Chrysler Automobiles, is taking another swing at trying to promote the idea of a merger with General Motors.

The financial markets, however, are not going to continue to ignore the potential of a merger that could yield “cataclysmic changes in performance”, Marchionne said.

When asked by Automotive News if all of this was headed toward some attempt at a hostile takeover of GM – which is valued at more than $46 billion compared to FCA’s less than $19 billion – Marchionne replied in a matter that characterizes the outspoken CEO.

However, a GM spokesman has said that the responses they’ve made to FCA have been appropriate. Automotive News cited an unnamed high-ranking GM executive as asking: “Why should we bail out FCA?” “In steady-state environments, it’ll make me $28 to $30 billion”, at a seasonally adjusted annual selling rate of 17 million.

GM CEO Mary Barra told reporters in June that the company didn’t need to merge with FCA and that the GM board dismissed a proposal emailed to her by Marchionne.

He told AN that he has crunched the numbers on an FCA-GM merger, and they come out so good that his board of directors has no choice but to put the squeeze on GM. “We’re not talking about marginal improvement in margins,” he said.

“There are varying degrees of hugs”, said Marchionne to Automotive Magazine.

“The capital markets won’t understand why you are rejecting the discussion”, he said.

“The benefits are so high that I don’t think you can stop the machine”, he said. “After we completed a thorough review of a possible merger with FCA, we concluded that executing our current plan is the best way to create value for GM stockholders”, GM said in an emailed statement Sunday. Everything starts with physical contact.

Even as Marchionne pushes publicly for a GM deal, the audience of investors and industry analysts that could bolster his case and pressure GM leadership into merger talks remains largely disinterested in the prospect of a merger with one of the industry’s smaller players.

It’s easy to imagine several more logical pairings around the globe; Ford and Mazda, BMW and Honda, etc. But they won’t happen, at least not when the world is buying more cars than ever, because business as usual for an automaker today carries a far higher chance for profit for far less grief than merging with another firm – especially one with the challenges of Fiat Chrysler.