Fiat Chrysler Automobiles and General Motors merger could rake in USD$30 billion a year – Marchionne

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Fiat Chrysler Automobiles (FCA) CEO, Sergio Marchionne, is insistent on a merger with General Motors (GM). Very insistent, in fact. The problem, however, is that GM isn’t very keen on exploring the idea. In an interview with Automotive News Europe, the outspoken chief of FCA stated that it would be “unconscionable not to force a partner.”

It seems that his insistence can be attributed to the estimated combined earnings that the merger will bring if both automotive giants are to agree to a union. It’s reportedly larger than the global combined earnings of both FCA and GM as separate entities. To be exact, the merger will make USD$30 billion (RM125 billion) before interest, taxes, depreciation and amortisation, if it achieves sales of just 17 million vehicles per year.

“Look, the combined entity can make USD$30 billion a year in cash. Thirty. Just think about that number,” he said. Marchionne added that his board of directors will start pressuring GM into a discussion due to the projected profit that both carmakers stand to make through the merger, which Marchionne describes as ‘irrefutable’. He also went on to say that the figure was a hard one for his board of directors to ignore.

GM doesn’t seem too intent on the merger, despite the lucrative projections – Marchionne has tried to arrange for a meet with Mary Barra, CEO of General Motors, but the attempt was without success, as the head honcho of GM was said to have already rejected FCA’s advances previously. “We have scale,” Barra said two months ago, further stating very briefly that GM will instead be “merging with ourselves.”

Marchionne believes that there’s still a glimmer of a chance, as he is of the opinion that many will start to question GM’s tepid approach. “They won’t listen and that kind of abject refusal to engage – the capital markets won’t understand why you are rejecting the discussion,” he said. Marchionne explained that while the final deal can be turned down, the discussion could not.

On whether FCA would result to a hostile takeover, Marchionne denied that it would. “Not hostile,” he said, further explaining, “there are varying degrees of hugs. I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you. Everything starts with physical contact. Then it can degrade, but it starts with physical contact.” Is General Motors being a little too hasty on this one?

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Graham Chin

Having spent a number of years as a journalist for a local paper, a marketing executive for a popular German automotive brand and a copywriter, Graham, a true-blue Sarawakian, knew he had to take the leap back into the motoring scene - and so he did. To him, nothing’s better than cruising for hours along a scenic route, in a car that’s designed and built for that purpose.

 

Comments

  • frossonice on Sep 02, 2015 at 1:33 pm

    Bankrupt a few times but still arrogant, this GM people. Furthermore, joining forces with once enemy (Chrysler) seems like a humiliation for them.

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  • Robert Kaelin on Sep 05, 2015 at 11:27 pm

    FCA product portfolio is so outdated, and they don’t have the Capitol, no wonder they want a merge. Either lead, follow, or get the hell out of the way FCA.

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  • sudonano (Member) on Sep 26, 2015 at 7:20 pm

    LOL.

    Winterkorn should lead FCA. This guy needs to go.

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