Phaceliacapital Posted May 28, 2015 Share Posted May 28, 2015 I think he never wanted to merge with GM, but just put consolidation on the table. Link to comment Share on other sites More sharing options...
fareastwarriors Posted May 29, 2015 Share Posted May 29, 2015 Fiat Chrysler Chairman Says Reached Out to GM, Other Rivals About Consolidation John Elkann’s comments echo outspoken chief executive Sergio Marchionne http://www.wsj.com/articles/fiat-chrysler-chairman-says-proposed-consolidation-talks-with-multiple-rivals-1432912563 Link to comment Share on other sites More sharing options...
Philip Morris IV Posted May 31, 2015 Share Posted May 31, 2015 I think he never wanted to merge with GM, but just put consolidation on the table. I feel like we're waiting for the flop in another poker game. In this and the GM thread, it's been brought up that an FCAU-GM merger would not please the anti-trust gods. I am inclined to agree given the dominance in trucks. But Marchionne is too shrewd to not realize this. And unless I dozed off after the Max Warburton exchange, no one brought up anti-trust concerns in the call. Either it would pass anti-trust, or he's up to something. And while we're on the subject of anti-trust, one could argue the Ferrari spin off might pave the road for VW. If Ferrari were still in, VW would dominate the luxury market and raise concerns. Without it, not so much. Link to comment Share on other sites More sharing options...
phil_Buffett Posted June 3, 2015 Share Posted June 3, 2015 http://www.reuters.com/article/2015/06/02/us-fiatchrysler-delays-exclusive-idUSKBN0OI0C220150602 Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 3, 2015 Share Posted June 3, 2015 As Talks Near, UAW Steels for Strike Contract negotiations to take place amid climate of great profitability for auto makers http://www.wsj.com/articles/united-auto-workers-units-draw-up-strike-plans-1433265419 Link to comment Share on other sites More sharing options...
investor-man Posted June 3, 2015 Share Posted June 3, 2015 As Talks Near, UAW Steels for Strike Contract negotiations to take place amid climate of great profitability for auto makers http://www.wsj.com/articles/united-auto-workers-units-draw-up-strike-plans-1433265419 The notion that consolidation will make car makers more profitable is a bit dubious to me. As soon as a consolidation were made, and R&D costs reductions were realized, the unions would step in that take that chunk of savings for themselves. Of course, this doesn't matter to me if Marchionne can get a good price for FCAU ;) Link to comment Share on other sites More sharing options...
muscleman Posted June 3, 2015 Share Posted June 3, 2015 As Talks Near, UAW Steels for Strike Contract negotiations to take place amid climate of great profitability for auto makers http://www.wsj.com/articles/united-auto-workers-units-draw-up-strike-plans-1433265419 The notion that consolidation will make car makers more profitable is a bit dubious to me. As soon as a consolidation were made, and R&D costs reductions were realized, the unions would step in that take that chunk of savings for themselves. Of course, this doesn't matter to me if Marchionne can get a good price for FCAU ;) But the more consolidated, the better negotiation position that the auto maker has. For example right now if the US workers strike, Sergio can say, well, I am going to lay off you guys and move production to Italy. Vice versa. Especially it seems to me that the Chinese and Korean unions are more tolerant and understand sacrifice more than the US union. Link to comment Share on other sites More sharing options...
Nnejad Posted June 3, 2015 Share Posted June 3, 2015 It seems wishful to think a "I'll move production to Italy" argument will work. A US strike would still devastate domestic autos, which would then ruin the auto unions. It's really a painful structure for the whole thing. Link to comment Share on other sites More sharing options...
muscleman Posted June 3, 2015 Share Posted June 3, 2015 It seems wishful to think a "I'll move production to Italy" argument will work. A US strike would still devastate domestic autos, which would then ruin the auto unions. It's really a painful structure for the whole thing. UAW members count has been decreasing over the past 3 decades. All auto makers realize this problem. One way to solve the issue is to move production to Asia. I heard that Toyota's US factories only have non-UAW workers. Not sure how they got those workers though. Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 3, 2015 Share Posted June 3, 2015 It seems wishful to think a "I'll move production to Italy" argument will work. A US strike would still devastate domestic autos, which would then ruin the auto unions. It's really a painful structure for the whole thing. UAW members count has been decreasing over the past 3 decades. All auto makers realize this problem. One way to solve the issue is to move production to Asia. I heard that Toyota's US factories only have non-UAW workers. Not sure how they got those workers though. Non-US autos opened/are opening their factories in right-to-work states thus avoiding the union issues and having a cost advantage. Link to comment Share on other sites More sharing options...
cmlber Posted June 3, 2015 Share Posted June 3, 2015 As Talks Near, UAW Steels for Strike Contract negotiations to take place amid climate of great profitability for auto makers http://www.wsj.com/articles/united-auto-workers-units-draw-up-strike-plans-1433265419 The notion that consolidation will make car makers more profitable is a bit dubious to me. As soon as a consolidation were made, and R&D costs reductions were realized, the unions would step in that take that chunk of savings for themselves. Of course, this doesn't matter to me if Marchionne can get a good price for FCAU ;) Doesn't the two-tier wage structure give Sergio a lot of leverage? 60% of Chrysler's employees make $28/hr, 40% make $18/hr. How can the UAW maintain a strike if Sergio offers to phase out $28/hr wages as employees retire and offers to raise the starting tier to $22/hr, an offer that would be very good for Chrysler? Good luck pressuring your $18/hr counterpart doing the same work you are getting paid $28/hr for to not accept a 20%+ wage increase and miss out on months of paychecks so that you can make even more money when you're already making 50%+ more than your counterpart for the same work... Wouldn't that 40% of the workforce break the strike and go back to work? The possibility of striking is what gives unions leverage, but to strike effectively you need solidarity. The two tier wage system creates an us vs them mentality within the union, makes it MUCH harder to maintain solidarity. I also think this is probably why Sergio hasn't committed to keeping the Wrangler in Toledo and supposedly pushed it back 6 months. Better to have it as a bargaining chip, it would be very easy to move it to Mexico. Link to comment Share on other sites More sharing options...
merkhet Posted June 5, 2015 Share Posted June 5, 2015 Fiat Chrysler CEO says Ferrari IPO won't take place before Oct. 12 http://reut.rs/1IpoLy7 Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 5, 2015 Share Posted June 5, 2015 Fiat Chrysler CEO says Ferrari IPO won't take place before Oct. 12 http://reut.rs/1IpoLy7 Fiat Chrysler Delays Ferrari IPO Share sale must occur one year after completion of parent’s merger, CEO Marchionne says http://www.wsj.com/articles/fiat-chrysler-delays-ferrari-ipo-1433521014 Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted June 5, 2015 Share Posted June 5, 2015 Fiat Chrysler CEO says Ferrari IPO won't take place before Oct. 12 http://reut.rs/1IpoLy7 :/ I knew that he said they wouldn't spin any off until a year later, but I didn't realize that they'd also have to delay the share sale too. I guess I'll just need some more patience. Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 9, 2015 Share Posted June 9, 2015 Chrysler Boss Recruits Activists to Prod GM Into a Merger Sergio Marchionne believes hedge funds can sway rival’s board to accept his entreaties http://www.wsj.com/articles/chrysler-boss-recruits-activists-to-prod-gm-into-a-merger-1433806966 Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted June 9, 2015 Share Posted June 9, 2015 Chrysler Boss Recruits Activists to Prod GM Into a Merger Sergio Marchionne believes hedge funds can sway rival’s board to accept his entreaties http://www.wsj.com/articles/chrysler-boss-recruits-activists-to-prod-gm-into-a-merger-1433806966 There is certainly enough fast money represented in GM's shareholder roster to make it happen -but GM/Mary Barra seem to have Buffett in their corner... Anyone have a good Berkshire Motors joke? EDIT: fcau up 5% after hours.. geez Link to comment Share on other sites More sharing options...
phil_Buffett Posted June 9, 2015 Share Posted June 9, 2015 Marchionne's contacts with activist investors, however, have not yet landed a patron, and a similar strategy could be used with at least one European carmaker, the WSJ said maybe VW? i still think he is playing poker again, and only want to make vw envy to gm. and that vw buys it in the end. gm or vw or someone else, i doesnt matter for me, i know Sergio will do the right steps and iam delighted to invest with him, in the end the stock Price is way up. Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 9, 2015 Share Posted June 9, 2015 Fiat and Mergers: Right Road, Wrong Vehicle Fiat’s Sergio Marchionne is right about the need for auto-industry consolidation. That doesn’t mean potential suitors like GM are lining up for his company http://www.wsj.com/articles/fiat-and-mergers-right-road-wrong-vehicle-1433878401 Link to comment Share on other sites More sharing options...
buylowersellhigh Posted June 11, 2015 Share Posted June 11, 2015 Alternatives to GM: http://www.bloomberg.com/news/articles/2015-06-11/marchionne-said-to-mull-alternatives-as-gm-deal-chance-lessens Fiat and Mergers: Right Road, Wrong Vehicle Fiat’s Sergio Marchionne is right about the need for auto-industry consolidation. That doesn’t mean potential suitors like GM are lining up for his company http://www.wsj.com/articles/fiat-and-mergers-right-road-wrong-vehicle-1433878401 Link to comment Share on other sites More sharing options...
muscleman Posted June 11, 2015 Share Posted June 11, 2015 Alternatives to GM: http://www.bloomberg.com/news/articles/2015-06-11/marchionne-said-to-mull-alternatives-as-gm-deal-chance-lessens Fiat and Mergers: Right Road, Wrong Vehicle Fiat’s Sergio Marchionne is right about the need for auto-industry consolidation. That doesn’t mean potential suitors like GM are lining up for his company http://www.wsj.com/articles/fiat-and-mergers-right-road-wrong-vehicle-1433878401 I think we will see some progress in the next few months. There are a number of options: 1. Talking to Bil Ackman and get his hands on GM. Bill is usually a long term shareholder, usually holding for 4-5 years, unlike what the article says as short term oriented. 2. Having a cross-shareholding alliance with Nissan and Renault. That is not as great as full scale merger but it would work. 3. Given the large cash hoard on GM's balance sheet and low interest rate, it would not be a bad idea to make a leveraged buyout offer. Maybe $45 a share. GM's balance sheet has $20 per share so the actual loan is just $25 per share, so that's $40 bn loan in total. Assuming a 10% interest and annual interest payment is 4bn. The current pre-tax annual income for GM is 4, 5 and 6 bn in 2014, 2013 and 2012, and 2015's expected earning would be 8-9 bn pre-tax, excluding any cost synergies, so I think 4 bn annual interest payment is manageable. Link to comment Share on other sites More sharing options...
compounding Posted June 11, 2015 Share Posted June 11, 2015 Alternatives to GM: http://www.bloomberg.com/news/articles/2015-06-11/marchionne-said-to-mull-alternatives-as-gm-deal-chance-lessens Fiat and Mergers: Right Road, Wrong Vehicle Fiat’s Sergio Marchionne is right about the need for auto-industry consolidation. That doesn’t mean potential suitors like GM are lining up for his company http://www.wsj.com/articles/fiat-and-mergers-right-road-wrong-vehicle-1433878401 I think we will see some progress in the next few months. There are a number of options: 1. Talking to Bil Ackman and get his hands on GM. Bill is usually a long term shareholder, usually holding for 4-5 years, unlike what the article says as short term oriented. 2. Having a cross-shareholding alliance with Nissan and Renault. That is not as great as full scale merger but it would work. 3. Given the large cash hoard on GM's balance sheet and low interest rate, it would not be a bad idea to make a leveraged buyout offer. Maybe $45 a share. GM's balance sheet has $20 per share so the actual loan is just $25 per share, so that's $40 bn loan in total. Assuming a 10% interest and annual interest payment is 4bn. The current pre-tax annual income for GM is 4, 5 and 6 bn in 2014, 2013 and 2012, and 2015's expected earning would be 8-9 bn pre-tax, excluding any cost synergies, so I think 4 bn annual interest payment is manageable. 1: Bill Ackman? Where did that come from? Seems very unlikely to me that he would buy an auto company to hold for 4-5 years, given what I know about his portfolio and style. 2: As I have stated before, I could see this combination work in terms of geographical footprint etc. But Marchionne hasn't even talked to Ghosn yet, so it's unlikely he sees them as his ideal merger partner. Would surprise me if anything material were to happen in the next few months. Also, how would Renault's activist investor (the French government) react? 3: Seems extremely unlikely to me that FCA can do a leveraged buyout of GM. You know FCA has over €30B in gross debt, right? Plus underfunded pensions at both companies etc. Link to comment Share on other sites More sharing options...
muscleman Posted June 11, 2015 Share Posted June 11, 2015 Alternatives to GM: http://www.bloomberg.com/news/articles/2015-06-11/marchionne-said-to-mull-alternatives-as-gm-deal-chance-lessens Fiat and Mergers: Right Road, Wrong Vehicle Fiat’s Sergio Marchionne is right about the need for auto-industry consolidation. That doesn’t mean potential suitors like GM are lining up for his company http://www.wsj.com/articles/fiat-and-mergers-right-road-wrong-vehicle-1433878401 I think we will see some progress in the next few months. There are a number of options: 1. Talking to Bil Ackman and get his hands on GM. Bill is usually a long term shareholder, usually holding for 4-5 years, unlike what the article says as short term oriented. 2. Having a cross-shareholding alliance with Nissan and Renault. That is not as great as full scale merger but it would work. 3. Given the large cash hoard on GM's balance sheet and low interest rate, it would not be a bad idea to make a leveraged buyout offer. Maybe $45 a share. GM's balance sheet has $20 per share so the actual loan is just $25 per share, so that's $40 bn loan in total. Assuming a 10% interest and annual interest payment is 4bn. The current pre-tax annual income for GM is 4, 5 and 6 bn in 2014, 2013 and 2012, and 2015's expected earning would be 8-9 bn pre-tax, excluding any cost synergies, so I think 4 bn annual interest payment is manageable. 1: Bill Ackman? Where did that come from? Seems very unlikely to me that he would buy an auto company to hold for 4-5 years, given what I know about his portfolio and style. 2: As I have stated before, I could see this combination work in terms of geographical footprint etc. But Marchionne hasn't even talked to Ghosn yet, so it's unlikely he sees them as his ideal merger partner. Would surprise me if anything material were to happen in the next few months. Also, how would Renault's activist investor (the French government) react? 3: Seems extremely unlikely to me that FCA can do a leveraged buyout of GM. You know FCA has over €30B in gross debt, right? Plus underfunded pensions at both companies etc. GM has a huge cash pile and no poison pills. That makes it an ideal hostile takeover target. Yes FCA has 30 B debt, but if you look at my proposal, would you think 70 bn debt post merger is unsustainable? Ford has 122 bn long term debt and it would be far smaller compared with GM-FCA post merger. Link to comment Share on other sites More sharing options...
vinod1 Posted June 11, 2015 Share Posted June 11, 2015 Alternatives to GM: http://www.bloomberg.com/news/articles/2015-06-11/marchionne-said-to-mull-alternatives-as-gm-deal-chance-lessens Fiat and Mergers: Right Road, Wrong Vehicle Fiat’s Sergio Marchionne is right about the need for auto-industry consolidation. That doesn’t mean potential suitors like GM are lining up for his company http://www.wsj.com/articles/fiat-and-mergers-right-road-wrong-vehicle-1433878401 I think we will see some progress in the next few months. There are a number of options: 1. Talking to Bil Ackman and get his hands on GM. Bill is usually a long term shareholder, usually holding for 4-5 years, unlike what the article says as short term oriented. 2. Having a cross-shareholding alliance with Nissan and Renault. That is not as great as full scale merger but it would work. 3. Given the large cash hoard on GM's balance sheet and low interest rate, it would not be a bad idea to make a leveraged buyout offer. Maybe $45 a share. GM's balance sheet has $20 per share so the actual loan is just $25 per share, so that's $40 bn loan in total. Assuming a 10% interest and annual interest payment is 4bn. The current pre-tax annual income for GM is 4, 5 and 6 bn in 2014, 2013 and 2012, and 2015's expected earning would be 8-9 bn pre-tax, excluding any cost synergies, so I think 4 bn annual interest payment is manageable. It does not make sense from a GM perspective. They have lots of low hanging fruit that are likely to generate attractive returns - materials optimization, streamlining operations, standardizing vehicle platforms, taking Cadillac global, etc. A large merger would be much more risky and much less desirable with these opportunities available. I also think they would face regulatory hurdles. Big Three to Big Two? Labor unions would be up in arms as this would reduce their ability to play one against the other. Brand overlap..... GM has cash but they need $20 billion as they pointed out to ride out a brief two year economic downturn. We are not taking great depression here. Just a normal recession. Vinod Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 11, 2015 Share Posted June 11, 2015 I still believe VW will be a better match since they are weak in the U.S. FCA has good assets in the States. But VW already said they weren't interested. :'( Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted June 11, 2015 Share Posted June 11, 2015 Alternatives to GM: http://www.bloomberg.com/news/articles/2015-06-11/marchionne-said-to-mull-alternatives-as-gm-deal-chance-lessens Fiat and Mergers: Right Road, Wrong Vehicle Fiat’s Sergio Marchionne is right about the need for auto-industry consolidation. That doesn’t mean potential suitors like GM are lining up for his company http://www.wsj.com/articles/fiat-and-mergers-right-road-wrong-vehicle-1433878401 The article mentions "Peugeot" as a fallback option - in terms of positioning my impression was thatPeugeot was in worse shape (heavier European exposure, etc) than fcau. Would it be worth the potential savings? In a recent trip to China I will say however that Peugeot's China partnered cars in the Middle Kingdom sure look spiffy -nice looking autos Link to comment Share on other sites More sharing options...
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