Fiat Chrysler denies report of merger talks with VolksWagen

Jul 17 2014, 20:43 IST
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Fiat Chrysler has denied a magazine report saying it's in merger talks with Volkswagen, while the German carmaker said it had no takeovers on its agenda. reuters Fiat Chrysler has denied a magazine report saying it's in merger talks with Volkswagen, while the German carmaker said it had no takeovers on its agenda. reuters
SummaryFiat Chrysler has denied a magazine report saying it's in merger talks with Volkswagen...

Fiat Chrysler has denied a magazine report saying it's in merger talks with Volkswagen, while the German carmaker said it had no takeovers on its agenda.

Germany's Manager Magazine said on Thursday, Volkswagen Chairman Ferdinand Piech had held talks with the owners of Fiat Chrysler about buying all or part of the group that was formed this year from the merger of Italian and U.S. car makers.

The magazine cited unnamed company sources.

However, a VolksWagen spokesman said Europe's biggest car maker was focused on delivering improvements at its existing operations.

"There are currently no M&A (merger and acquistion) projects on the agenda," he said. "We are now focusing on boosting efficiency across the group."

The Agnelli family's holding firm Exor, which owns a 30-percent stake in Fiat Chrysler, denied any talks had taken place, as did Fiat Chrysler.

Shares in Fiat Chrysler jumped 5 percent to 7.98 euros on the report, but had retreated to stand up 2.2 percent by 1352 GMT. VolksWagen's stock was 1.8 percent lower.

VolksWagen Chief Executive Martin Winterkorn said in March the carmaker, though hoarding almost 18 billion euros ($24 billion) in cash, had no plans to expand the group through acquisitions as it was focusing on integrating its 12-brand network.

VolksWagen has since sealed a 6.7-billion euro buyout of minority shareholders at Swedish truck division Scania to forge a long-planned alliance of its truck brands.

The report could suggest "diverging views" between VolksWagen's management and the supervisory board about the carmaker's future course, said Arndt Ellinghorst, a London-based analyst at investment researchers ISI Group, at a time when Winterkorn, 67, and Piech, 77, are soon likely to face a debate over succession.

Rather than talking about further expansion, top managers at VolksWagen - concerned that profitability gains aren't keeping pace with the company's steadily-growing size - have been pushing a new efficiency programme that includes 5 billion euros of cost cuts per year at the core passenger-car brand.

Earlier this month, VolksWagen also denied a report it was planning a bid for U.S. truck maker Paccar next year.

INTERESTED IN ASSETS?

"The risks from integrating Italian plants and managing a U.S. business are material and we do not believe that the potential benefits justify the risks," Ellinghorst wrote in a note to clients.

A person familiar with the situation told Reuters that VW would more likely bid for Fiat assets such as Magnetti or Alfa Romeo rather than the entire company.

A member of VolksWagen's supervisory board, which

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