It seems China is taking over the world, not militarily but rather ironically as a financial power. However, that power wasn’t enough for the boss of Fiat, Sergio Marchionne, to reject a serious offer from a large Chinese automaker. Industry sources claim that the Chinese car manufacturer, Great Wall Motor Co, recently offered Fiat terms slightly above market value.
Large Chinese companies are either state run or their activities are state controlled, thus many large companies have been told to begin overseas expansion, acquiring foreign companies is one method. That’s why Great Wall made an offer and not necessarily because they want to.
Marchionne has been pitching for an alliance or merger with various auto manufacturers for a number of years because Fiat needs a lot of investment to remain relevant and competitive.
If Great Wall were to acquire Fiat it would offer access to a global manufacturing hub and U.S markets via Fiat owned Chrysler and Jeep brand dealerships.
If Fiat were to agree on a sale then Alfa Romeo and Maserati would be retained by the Agnelli family holding company, in turn, both Alfa and Maserati would be spun off into separate entities.
The mere news of a speculative buy out sent Fiat shares rising, Marchionne is currently nearing a restructuring plan of FCA that will aim to turn around loss making parts of the company. He is due to retire in two years time.
Marchionne is a shrewd player, his goal is to get as much value for the Agnelli family as is possible and if Great Wall were to write out a big enough cheque a deal would be done almost immediately.
So how much money would it take for Fiat to agree on a sale? $5-6 billion dollars, that’s how much debt Fiat have acquired under the Marchionne era.