Fiat Chrysler Was in Geely's Sights Before Daimler Deal: Report

Steph Willems
by Steph Willems

After last week’s announcement of a $9 billion Daimler stock buy-up by China’s Geely Group, an old story is once again rearing its head. Remember last year’s buzz surrounding a possible takeover of Fiat Chrysler Automobiles? The rumors CEO Sergio Marchionne subsequently refuted? Yes, that story.

A new report claims Geely did indeed give FCA the once-over, even engaging in preliminary talks. Obviously, this first date went nowhere, as Geely now owns nearly 10 percent of German auto giant Daimler, not the maker of Jeeps and Rams.

Sources tell Bloomberg that in the middle of last year, Li Shufu, founder and chairman of Zhejiang Geely Holding Group Co., approached FCA. Shufu, always on the hunt for non-Chinese holdings (Geely owns Volvo Cars and Lotus, to name a couple), engaged in informal talks with the automaker, but adding FCA — or a large chunk of its stock — to the billionaire’s portfolio just wasn’t in the cards.

No offer was made, the sources claim. Apparently, Shufu and FCA disagreed over the automaker’s future valuation once the current five-year plan wraps up. This jibes with statements made by Geely following last year’s Reuters report.

As for that fresh 9.7 percent stake in Daimler, Geely didn’t go about the stock buy in the usual way. Bloomberg reports the automaker snapped up the shares via a derivatives transaction. The collar trade, allegedly led by Bank of America and Morgan Stanley, would be the largest single-stock deal of its kind. Such a setup would limit Geely’s financial losses if Daimler’s stock were to suddenly tank. It also puts a ceiling on how much cash Geely could reap if Daimler’s shares blow up.

While Daimler appears to welcome the stock purchase, claiming it’s encouraged by Shufu’s confidence in the automaker’s future, Germany seems a little wary of the deal. On Monday, various German newspapers reported (via Reuters) that a Parliamentary committee will question officials to ensure the Daimler-Geely deal is on the up and up.

Last year, Germany tightened laws aimed preventing the foreign takeover of domestic businesses. Geely’s 9.7 percent stake falls well below the 25 percent marker, which is point where the German government can step in to kibosh a deal. Speaking about Geely, German economy minister Brigitte Zypries steered clear of specifics, saying only that her country’s industry must not be “exploited” by other countries.

[Image: Fiat Chrysler Automobiles]

Steph Willems
Steph Willems

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  • Geozinger Geozinger on Feb 28, 2018

    I'm kind of surprised that Geely didn't make an offer to buy part/all of FCA. OTOH, I would have to imagine that Daimler would be a pretty safe bet. I have read that FCA should be debt-free in the near future (I don't remember the exact time frame). Maybe the Agnelli family is waiting it out to extract the maximum benefit. Regardless, it seems to me that eventually the Chinese automakers won't even need to buy companies wholesale, they'll just own bits and pieces all over the place. Many streams and all that...

  • Brandloyalty Brandloyalty on Feb 28, 2018

    Why is the truck pictured with kayaks instead of a speedboat? Do their market research people know something everyone else doesn't? Or they lost their minds. Or as a joke?

  • ToolGuy Ford is good at drifting all right... 😉
  • Dave Holzman A design award for the Prius?!!! Yes, the Prius is a great looking car, but the visibility is terrible from what I've read, notably Consumer Reports. Bad visibility is a dangerous, and very annoying design flaw.
  • Wjtinfwb I've owned multiple Mustang's, none perfect, all an absolute riot. My '85 GT with a big Holley 4 barrel and factory tube header manifolds was a screaming deal in its day and loved to rev. I replaced it with an '88 5.0 Convertible and added a Supercharger. Speed for days, handling... present. Brakes, ummm. But I couldn't kill it and it embarrassed a lot of much more expensive machinery. A '13 Boss 302 in Gotta Have It Green was a subtle as a sledgehammer, open up the exhaust cut outs and every day was Days of Thunder. I miss them all. They've gotten too expensive and too plush, I think, wish they'd go back to a LX version, ditch all the digital crap, cloth interior and just the Handling package as an add on. Keep it under 40k and give todays kids an alternative to a Civic or WRX.
  • Jpolicke In a communist dictatorship, there isn't much export activity that the government isn't aware of. That being the case, if the PRC wanted to, they could cut the flow of fentanyl down to a trickle. Since that isn't happening, I therefore assume Xi Jinping doesn't want it cut. China needs to feel the consequences for knowingly poisoning other countries' citizens.
  • El scotto Oh, ye nattering nabobs of negativism! Think of countries like restaurants. Our neighbors to the north and south are almost as good and the service is fantastic. They're awfully close to being as good as the US. Oh the Europeans are interesting and quaint but you really only go there a few times a year. Gents, the US is simply the hottest restaurant in town. Have to stand in line to get in? Of course. Can you hand out bribes to get in quicker? Of course. Suppliers and employees? Only the best on a constant basis.Did I mention there is a dress code? We strictly enforce it. Don't like it? Suck it.
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