General Motors Co. said Monday it remains uninterested in a tie-up with Fiat Chrysler Automobiles, after CEO Sergio Marchionne told Automotive News that it would be “unconscionable” for FCA and its board not to pursue GM into discussing a merger.
Marchionne, in the Automotive News story posted Sunday, said the two companies could put up some very large financial figures that he and his board can’t shy away from. Marchionne told Automotive News that a merged FCA and GM could make $30 billion a year in cash when combining their EBITDA (earnings before interest, taxes, depreciation and amortization). He told Automotive News he is basing his calculations on a seasonally adjusted annual selling rate of 17 million vehicles in the United States.
GM, however, has reviewed a possible merger with FCA several times and has concluded the company and its shareholders are better off sticking to its own growth plan.
“Our management and board are always working to maximize shareholder value,” GM said in a statement. “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.”
Marchionne told Automotive News that the bid for GM is not a hostile takeover.
“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,” Marchionne told the publication. “Everything starts with physical contact. Then it can degrade, but it starts with physical contact.”
The Detroit automaker earlier this year rejected a merger advance from FCA. In June, CEO Mary Barra said that Marchionne this spring sent a letter to GM about a potential merger, which was vetted by management and the board and ultimately turned down to focus on GM’s own improvement plans.
Barra told reporters in June that GM has scale and essentially is “merging with ourselves.”
FCA is behind other automakers in areas such as alternative powertrain development of electric vehicles that will be needed to meet federal fuel economy regulations. The company also lags other carmakers in sales in China, the world’s largest market.
There likely would be much expense and cost to merge the companies. And some industry observers also question whether a merger of FCA and GM could be done without shedding brands, dealers, manufacturing plants or manufacturing jobs.