Fiat Chrysler Automobiles May Try to Force GM Merger Talks

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Fiat Chrysler Automobiles US (FCA US) may be considering other options after asking GM politely about a merger.

The lamestream media had fun this month reporting that General Motors responded with the equivalent of “Go fly a kite” to Sergio Marchionne’s overture about a merger.  Most people outside of the automotive world are not aware that Marchionne has turned the car universe upside down since 2009.  New reports are that the first request was just Marchionne being polite.  He may not have to ask politely to get what he wants.

Orlando Washington,Lyndie Greenwood

According to the Irish Times, General Motors is scrambling to find outside advisors to help the company negotiate, or say no to, a more forceful request by FCA US.  “GM had asked Goldman Sachs and Morgan Stanley for advice as fiery FCA boss Sergio Marchionne is said to be lobbying GM investors in an effort to drag the GM board to the negotiating table,” reads the Irish Times piece.

General Motors is a public company.  Much of the ownership of the company is in the hands of key, large investors.  If they can be convinced that a merger with FCA US will raise the value of their shares, General Motors has a real problem.

Or maybe GM doesn’t have a problem.  A merger might end up being a good thing.  It is too hard to tell what form the tie-up might take.  Not long ago the “merger of equals” between Mercedes-Benz and Chrysler ended up being a complete takeover by Mercedes.  It was a terrible arrangement for the German company which ended up dumping Chrysler for a bucket of pucks and third round draft pick (Mercedes gave Chrysler away to get rid of it).  Chrysler came away from the relationship with a kick-butt SUV chassis that underpinned its next Grand Cherokee and bought time to survive until the next disaster.  Since Fiat’s Marchionne got involved with Chrysler the company has thrived.  Maybe GM having ties with the company that makes Ferraris and Maseratis might not be all bad.

It is too soon to really know much about how this might develop.  General Motors lining up lawyers means the company knows that when quiet and reserved Sergio makes a suggestion, he may not actually be asking.