Hyundai denies rumors over potential merger with Fiat Chrysler Automobiles

Article by Christian A., on July 9, 2018

Rumors of a potential merger between Fiat Chrysler Automobiles and Hyundai Motor Group quickly spread like a wildfire. But the South Korean carmaker is also quick enough to try dousing the fire by denying the rumor.

The denial was made officially to Roadshow by Michael Stewart, senior group manager of Hyundai Corporate and Marketing Public Relations. Stewart said the merger rumor is totally groundless.

As early as 2015, FCA has been courting suitors for a possible merger or takeover. In 2017, there were rumors saying that Hyundai has shown interest to acquire FCA. A number of the Chinese companies had also expressed interest in buying out FCA. At that time, Hyundai maintained its silence over the takeover. Even FCA chief executive Sergio Marchionne denied the rumors. Interestingly, FCA’s share price spiked after the reports of interest.

The latest rumor regarding a possible merger or takeover of Fiat Chrysler Automobiles by Hyundai was ignited by a report from Asia Times citing unnamed sources that the CEO of the South Korean carmaker, Chung Mong-koo, is waiting for the share price of the FCA to decline before initiating a takeover offer. According to report, Chung will make a bid between this summer and the Fiat-Chrysler annual shareholders’ meeting that will be held in May 2019. At that time, Marchionne is expected to formally quit as FCA’s CEO.

Marchionne has been looking to merge FCA with another company partly because of the overcapacity in the auto industry. Aside from that, FCA chairman and majority shareholder John Elkann isn't keen in running the carmaker, as he is more interested in the news media industry than in the auto industry. In fact, Elkann recently gained a controlling stake in The Economist Group and considered is a possible.

Moreover, there is seemingly a rift between Elkann and Marchionne over FCA’s next CEO. An FCA source told Asia Times that Elkann wants an industrial CEO like Alfredo Altavilla, currently Chief Operating Officer of Fiat Europe, the Middle East and Africa or Michael Manley of Jeep and Ram Brand. Marchionne, meanwhile, is eyeing FCA Chief Financial Officer Richard Palmer to become the carmaker’s next top honcho.

A merger between FCA and Hyundai could make the South Korean company the largest automaker in the world. In addition, Hyundai would benefit from the expanded portfolio and high consumer awareness of FCA brands both in the United States and Europe. Likewise, the merger would not just result to higher volumes, but also help Hyundai fill its lineup with SUVs and trucks from FCA.

Aside from ensuring FCA’s future after Marchionne’s departure in 2019, the merger would also benefit from Hyundai’s expertise and expertise in electrification – something that that Italian-American carmaker virtually lacks.

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Topics: hyundai, fiat, chrysler, sale

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