FCA Losing Potential Dance Partners, Foreign and Domestic

First it was Geely. Then Dongfeng. Now add Guangzhou Automobile Group to the list of Chinese automakers that have denied interest in acquiring Fiat Chrysler Automobiles (FCA).

FCA has seemingly been seeking a dance partner for a merger or acquisition for a year or two now, and the company’s stock rose earlier this week when Automotive News reported that a “well-known Chinese automaker” had made an offer to acquire FCA. The company has a market value close to $20 billion. Automotive News reported that the offer was rejected for not being enough.

If you’re reading carefully, you’ll note that just because three of the most well-known Chinese makes have declined interest, it doesn’t mean FCA is standing forlornly along the gym’s wall as everyone else dances. The list of major Chinese automakers is long, and BYD, Chery, SAIC and others could still step up – one of them, or another Chinese manufacturer, could have made the offer that AN reported on.

If the report is accurate, it marks progress for FCA. Fiat Chrysler’s earlier overtures to General Motors went nowhere, and Volkswagen also threw cold water on any attempts at a partnership.

By my count, that makes five automakers – three Chinese, one American, and one German – that have said they were going to be spending the weekend washing their hair when Sergio came calling.

It’s interesting that after two years searching, FCA has reportedly turned down an offer for being too low. Automotive News reported that the offer was just above the company’s market value.

This means Sergio either obviously thinks the company is worth far more than that, or there were other issues with the deal (or both).

A Chinese partnership with/ownership of FCA does make sense – it would give the Chinese automaker access to FCA’s successful Ram and Jeep brands while giving FCA an influx of cash that could help it address the segments where it’s weak.

If the offer was rejected for being a little low, it’s obviously possible that the potential buyer could come back to the table with more cash. If that’s the case, and if a deal is struck, FCA may no longer find itself along the wall.

[Source: Reuters] [Image: Fiat Chrysler Automobiles]