Fiat chief says rebel investors will spur mergers
Sergio Marchionne, chief executive of Fiat Chrysler Automobiles, has predicted that carmakers reluctant to consolidate will be forced to reconsider their stance as they come under attack from activist investors.
In an interview with the Financial Times, Mr Marchionne warned that his rivals could not continue to avoid having a serious debate about mergers.
His comments came as four hedge funds launched a campaign to win a seat on General Motors’ board for Harry Wilson, a key figure in the restructuring of the US car industry, in an effort to force the carmaker to spend $8bn on share buybacks.
“The activists have started targeting carmakers,” Mr Marchionne said in New York. “At first many boards will try to defend themselves with lawyers and bankers, but ultimately they will have to come to the table to discuss a merger with either us or other large competitors.”
Mr Marchionne has repeatedly said the motor industry needs to consolidate to cut operating costs and reduce capital spending on areas such as technology to reduce carbon dioxide emissions and connected car systems.
This year, the Italian-American carmaker plans to spin off Ferrari, its luxury brand, partly through a stock market listing, and this has raised speculation that Mr Marchionne — known in the industry as a consummate dealmaker — is preparing FCA for another transaction.
The spin-off, combined with stellar vehicle sales in the US and constant speculation about possible deals, has helped FCA’s share price rise almost 50 per cent since the newly merged carmaker listed in October.
“FCA is ready to merge with another major player in the US, Europe or Asia that would make it possible for them to compete globally and cut costs,” said one banker who focuses on industry deals.
Mr Marchionne said he was open to consolidation but stressed that he has not held talks with anyone yet.
One person familiar with Mr Marchionne’s thinking said that his top picks would be a merger with Volkswagen or GM. “They are the only ones who would really be able to stomach it,” the person said.
Tata Motors, the Indian owner of Jaguar Land Rover, would also be a potential candidate for a combination with FCA, the person added. Fiat and Tata Motors were once joint venture partners, and Ratan Tata, former chairman of the Tata group, sat on Fiat’s board until 2012.