Daily Management Review

Interest In Fiat Chrysler Confirmed By China's Great Wall


Interest In Fiat Chrysler Confirmed By China's Great Wall
As investors cheered the potential sale of the storied Jeep brand, FCA shares were up sharply on Monday after a direct overture by Chinese automaker Great Wall Motor Co Ltd to Italian-American automaker Fiat Chrysler Automobiles NV.
Whether Great Wall Motor wanted all or part of FCA is still not very clear.
Great Wall Motor's President, Wang Fengying, plans to contact FCA to discuss acquiring the Jeep brand, reported Automotive News first earlier on Monday.
"With respect to this case, we currently have an intention to acquire. We are interested in (FCA)," an official at Great Wall Motor's press relations department told the media. He declined to give his name and gave no further details.
Great Wall Motor had asked for a meeting with FCA to make an offer for all or part of the group, reported the media quoting two people familiar with the matter.
It was implementing its current business plan and had not been approached by Great Wall Motor, said FCA, which is incorporated in the Netherlands and based in London, in a statement. There were no comments from its main investor, Italy's Agnelli family.
As costs rise to comply with emissions regulations and develop technology for electric and self-driving cars, the company wants to find a partner or buyer for the world's seventh-largest automaker, FCA Chief Executive Sergio Marchionne has said.
The door to selling Jeep or the profitable Ram truck business in North America as standalone units have so far not been opened by Marchionne and company chairman John Elkann.
Analysts say that other automakers like Volkswagen AG, General Motors Co or Ford Motor Co might show interest, if Marchionne is willing to sell Jeep on its own.
The "political feasibility of such a transaction given (automaker mergers and acquisition) is often held to a different standard in the current political environment” is the key question of a Chinese acquisition of some or all of Fiat Chrysler, Jefferies said in a research note last week.
But "Chrysler's background which has included multiple changes of ownership, including two foreign acquirers" in two decades, Jefferies noted.
At a time of heightened trade friction between Washington and Beijing, a brand that was once a symbol of U.S. military power, and now epitomizes American myths of freedom and adventure would be put in play if there is a formal offer by Great Wall for Jeep.
When then-Republican candidate Mitt Romney ran advertisements in Ohio claiming that FCA was considering moving production of Jeep models out of the state, Jeep became a flashpoint in the 2012 U.S. presidential election. And although the company did begin building Jeeps in China for the Chinese market, Fiat Chrysler said Jeep production would not be moved to China from the United States.
scrutiny of Chinese acquisitions of U.S. assets have bene intensified by U.S. government this year.
Experts said that whether the Committee on Foreign Investment in the United States (CFIUS), which reviews acquisitions by foreign entities for potential national security risks, would scrutinize the offer if a Chinese bid for FCA or Jeep is made is not yet clear. A number large U.S. auto suppliers, with little push-back, have been acquired until now by Chinese companies.