Cars and Drivers

Fiat Chrysler Shares Jump Following Chinese Buyout Offer

Chris Lange

Published: August 14, 2017 1:15 pm

Last Updated: January 12, 2020 9:08 am

Fiat Chrysler Automobiles N.V. (NYSE: FCAU) saw its shares make a handy gain on Monday after it came to light that a large Chinese automaker has offered to acquire the company. However, the offer was ultimately rejected and the Chinese company remains unidentified.

Chinese companies currently are under pressure by the government to expand outside of China through the avenue of acquiring foreign companies. Fiat Chrysler might have been the perfect choice, considering its recent history.

Fiat Chrysler CEO Sergio Marchionne has made the case in recent years that consolidation within the auto industry is necessary to help automakers meet global fuel economy standards and demands for investments in electric cars and self-driving technology.

As a result, Marchionne has focused on streamlining the automaker’s operations to make it enticing to a buyer, making bold moves such as exiting small cars and sedans and revamping the company’s manufacturing footprint.

One possibility for the unnamed would-be acquirer is Fiat Chrysler’s joint venture partner in China, Guangzhou Automobile. Executives have even mentioned that the company was considering plans to expand its ties to Fiat Chrysler in the United States.

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Automotive News detailed:

According to one source, any sale likely would involve FCA’s highly profitable Jeep and Ram brands, as well as Chrysler, Dodge and Fiat, but would exclude Maserati and Alfa Romeo. Those two brands would be spun off, as was Ferrari, to maximize returns for Exor, the holding company controlled by the Agnelli family, which owns a controlling interest in FCA, the source said, speaking on condition of anonymity.

Shares of Fiat Chrysler were last seen up nearly 9% at $12.64, with a consensus analyst price target of $15.91 and a 52-week range of $6.05 to $12.64.