Fiat Chrysler Rejects Volkswagen Merger Idea, or Does It?

Cars and Drivers

Published: March 16, 2017 10:25 am

Last Updated: January 12, 2020 1:54 pm

Last week, we reported that Fiat Chrysler Automobiles N.V. (NYSE: FCAU) CEO Sergio Marchionne was open to shopping around for a merger, but this door seems to be closing. At the Geneva Motor Show, Marchionne had said that a General Motors Co. (NYSE: GM) merger would be good for business, while hinting that Fiat Chrysler may be open to other companies as well.

Late Wednesday, Marchionne seemingly slammed the door on one of these companies when he said that there was “zero interest” in pursuing a merger with Volkswagen.

Despite this “staunch” stance, Marchionne did leave some wiggle room, saying that he would be open to listening to offers from Volkswagen CEO Matthias Mueller. Marchionne said:

If he wants to come, he knows where I live. I didn’t chase him and I have no intention of chasing him. But if I’m right on consolidation and the fact you need to build scale, we’re the natural place to go for him. I will not call Matthias. I have no interest.

Although Marchionne was replying to Mueller’s comments from a press conference Tuesday in which he said that there had been no contact between the two CEOs.

With all this he said she said and mixed signals, this almost sounds like a middle school romance, but worth billions of dollars.

Even though Fiat Chrysler came out and said there was zero interest for a merger, the way that these CEOs are talking might suggest that a merger is not off the table and it might be more of a discussion over price.

At this point more remains to be seen, but each company will have to make the right strategic decision for itself. Marchionne commented to reporters on Wednesday:

I only said that if you were the No. 1 automaker in Europe and somebody combines with another automaker to become the second and gets very close to your position, your very first reaction is to distance the second again. We are the only natural combination partner for somebody who wants to do that. If you were playing a chess board game, that’s what you would do.

Shares of Fiat Chrysler were trading up about 1.8% at $11.52 on Thursday, with a consensus analyst price target of $15.17 and a 52-week trading range of $5.45 to $11.63.

GM traded at $37.02, in a 52-week range of $27.34 to $38.55. The consensus price target is $39.65.

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