Hyundai Motor Group is reportedly planning to begin the takeover bid for Fiat Chrysler (FCA) before the Italian-American car manufacturer’s chief Sergio Marchionne retire next spring. According to an Asia Times report, Hyundai CEO Chung Mong-koo is waiting for an unexpected decline in FCA’s shares. Talks about FCA being taken over by another brand have been doing round for quite some times now, Marchionne had for long advocated for car companies to get into partnership so as to decrease overcapacity and for investments needed for electric and autonomous vehicle development.
Marchionne has expressed his desire for FCA to merge with another automaker. He lobbied hard for a tie-up with General Motors and reportedly explored options with many other companies, including PSA and Chinese firms.
Hyundai’s reported interest in FCA only gets complicated considering the key players in the deal. There is Paul Singer, who is principal of the hedge fund Elliott Management – an activist shareholder with a $1 billion stake in Hyundai and a major owner of equities in Fiat’s home turf of Italy. And there is FCA Chairman John Elkann, who apparently disagrees with Marchionne on a successor as CEO of Fiat Chrysler, has little interest in running the company himself and would prefer a merger.
Combining all these factors with what the Trump administration would make of FCA’s international flavour further blending. However, a South Korean brand is expected to be considered as a better deal to the US president and members of Congress than a Chinese conglomerate like Great Wall Motor, which has confirmed its interest in taking over all or parts of FCA.
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What would taking over FCA mean for Hyundai? Hyundai hasn’t commented on the developments in the matter, but would presumably stand to benefit from the dealer network Chrysler has and by the lucrative Jeep brand and perhaps Ram, too. And vice-versa, FCA is comparatively weak in Asian markets, where Hyundai has a stronghold.
If Hyundai and FCA were to merge, the new company would immediately become the world’s largest automaker with around 11.5 million worldwide deliveries each year.