FCA CEO Sergio Marchionne has been trying to merge the company with another automaker for years, so the news wasn’t exactly earth-shattering, and Automotive News couldn’t pin down which Chinese company made the bid.
But it’s pretty clear that Marchionne’s game plan before he retires in 2019 is to complete an arc for FCA that began in 2009, when Fiat took the bankrupt Chrysler off the US federal government’s hands.
Marchionne has already spun off Ferrari in what has turned out to be a highly profitable initial public offering in 2015 — Ferrari is currently the best-performing stock in the auto sector, up 87% year to date. (That’s better than even Tesla.)
On earnings calls, he has hinted that a combined Maserati-Alfa Romeo could be next — or Jeep, the crown jewel in the old Chrysler brand and a division that has been raking in the profits for FCA amid an SUV boom in the US.
Here’s Automotive News:
“According to one source, any sale likely would involve FCA’s highly profitable Jeep and Ram brands, as well as Chrysler, Dodge, and Fiat, but would exclude Maserati and Alfa Romeo. Those two brands would be spun off, as was Ferrari, to maximize returns for Exor, the holding company controlled by the Agnelli family, which owns a controlling interest in FCA, the source said, speaking on condition of anonymity.”
For all practical purposes, Marchionne wants to maximize value for the Agnellis — Gianni Agnelli made Fiat into an Italian industrial colossus after World War II — and his guiding idea is that FCA’s brands are worth more than the company as a whole. For example, Ferrari now has a market capitalization of $20 billion, more than FCA’s $18 billion.
Jeep could be worth far more than that.
Marchionne’s success with the Ferrari IPO could be influencing his thinking. He unsuccessfully lobbied for General Motors to merge with FCA in 2016, but that was before Ferrari shares took off in 2017. Marchionne also might have thought the Trump administration would assist in pressuring the Detroit rivals to combine forces, an outcome that doesn’t appear to be on the agenda.
So spinning off brands might now be his favored play. If that’s the case, then Maserati-Alfa would probably be next, with Jeep-Ram to follow.