Tag Archive | "merger"

G.M. Chief Flatly Dismisses a Merger Overture From Fiat Chrysler

DETROIT — Mary T. Barra, the chief executive of General Motors, on Tuesday firmly rejected the idea that the company could benefit from a combination with a rival automaker like Fiat Chrysler Automobiles, which tried in March to start merger talks with G.M., reports The New York Times.

In remarks made before G.M.’s annual shareholders meeting here, Ms. Barra said the company was committed to remaining independent and continuing its comeback from bankruptcy and a government bailout in 2009.

Yet even as Ms. Barra tried to focus attention on G.M.’s new products and strategic goals, she was dogged by questions about an unwanted merger proposal, as well as probable criminal charges against the company over its long-delayed recall last year of defective small cars linked to at least 111 deaths.

In her strongest comments to date on a potential merger, Ms. Barra said G.M. had no interest in pursuing a deal with Fiat Chrysler, despite a personal appeal made by its chief executive, Sergio Marchionne.

“There was an email that was very much vetted by our management and our board,” Ms. Barra said. “After we reviewed that, we were committed to our plan.”

G.M.’s plan, she said, was to continue to build brands, market share and international operations on its own. Adding a partner is not necessary for one of the world’s biggest auto companies, she said.

“We have scale, and we’re leveraging that scale,” she said. “For the last couple of years, we have really been merging with ourselves.”

G.M. is also trying to move beyond a difficult 2014, in which it recalled about 30 million vehicles in the United States, including 2.6 million small cars with faulty ignition switches that can cause sudden loss in engine power and disable airbags.

Ms. Barra declined to say much about a Justice Department investigation, which is expected to result in a large fine and criminal charges for G.M., according to people with knowledge of the inquiry.

She said that she met with federal investigators last year, and that the company was cooperating fully with the government.

“It is their timeline,” Ms. Barra said. “We are going to continue to cooperate to the fullest extent we can, but beyond that I think anything else is pure speculation.”

As the nation’s biggest automaker, G.M. is accustomed to scrutiny. But last year’s safety crisis intensified the attention.

Now just as G.M. is beginning to regain momentum in the marketplace, its long-term prospects have been clouded by Mr. Marchionne’s outspoken call for industry consolidation.

While Mr. Marchionne has not spoken about G.M. publicly, he suggested in his email to Ms. Barra that a combination of their two companies would save billions of dollars in costs and provide better returns to shareholders.

Ms. Barra bluntly rejected that notion on Tuesday, saying G.M. would sell 10 million vehicles worldwide this year and did not need a partner to improve profits and become more efficient.

“The best thing we can do is to be totally focused on the G.M. shareholder and to execute our plan,” she said.

G.M.’s plan hinges on expanding the Chevrolet and Cadillac brands, and continuing to restructure its chronically unprofitable European operations. Ms. Barra also emphasized that G.M. was pouring more resources into new technology and increasing its commitment to vehicle safety.

Industry analysts are skeptical that a merger would help G.M. One analyst, Brian Johnson of Barclays Capital, said in a research note that a combination with Fiat Chrysler would be a “bad idea,” even though it could temporarily drive up G.M.’s stock price, which has languished despite the company’s commitment in March to a $5 billion stock buyback.

Mr. Johnson pointed out that automakers had had little success in big mergers and alliances, notwithstanding Fiat’s acquisition of Chrysler last year.

He also noted that G.M.’s brands and products overlapped with Fiat Chrysler’s, and that any savings on shared parts and vehicle platforms might take years to achieve. In addition, management of each company could struggle to integrate with the other, as happened when the German automaker Daimler-Benz acquired Chrysler in the late 1990s.

Posted in Auto Industry NewsComments (0)

GM CEO Mary Barra Brushes Off Merger Talks

DETROIT – General Motors CEO Mary Barra said the automaker has a comprehensive plan in place through the early part of the next decade, and a merger with a large, competing automaker does not appear to be part of that, reported MLive.

Speaking in a conference call Thursday morning to discuss the Detroit company’s first quarter financial results, Barra was asked about Fiat Chrysler CEO Sergio Marchionne’s remarks on the possibility of merging with a large automaker, such as GM or Ford Motor Co., and about general chatter on the need for consolidation in the industry.

Barra said the plan GM currently has in place includes “plenty of areas for efficiency,” and that the company is already one of the top-tier, global OEMs. The company’s plan includes several milestones to ensure it remains at the top.

“We’re not going to entertain anything that’s going to distract us from accomplishing that,” Barra said.

Marchionne, who led Italian automaker Fiat SpA’s merger with Chrysler Group, said in March during an interview with Bloomberg News in Geneva that he would be open to combining the company with one if its larger Detroit rivals.

He called a combination with GM or Ford “technically feasible,” and said there’s always banter to that effect, but added that there is still “nothing substantive.”

At that time, both Ford and GM generally balked at the notion.

General Motors on Thursday reported net income of $945 million for the first quarter of 2015. That compares to net income of $108 million for the Detroit automaker in the comparable period one year ago.

The result came on revenues that dipped to $35.7 billion from $37.4 billion in the year-ago quarter.

Ford plans to report its first quarter results April 28, and FCA is set to do the same on April 29.

Posted in Auto Industry NewsComments (0)

Perella Weinberg to Merge Subprime Finance Companies

NEW YORK — Financial services firm Perella Weinberg Partners announced this week that it will merge its two subprime auto finance sources, Flagship Credit Acceptance and CarFinance Capital, into a single, national automotive finance company. The combined company will have total assets in excess of $2 billion.

“Since forming Flagship and CarFinance, we have been pleased with the performance and strong execution of both companies,” said David Schiff, partner and portfolio manager for Perella Weinberg Partners’ asset management arm. “Together, the two companies will create a top-tier independent auto finance company with enhanced scale, lower cost of capital, superior cost controls and more efficient access to the capital markets.”

Parella, which launched Irvine, Calif.-based CarFinance Capital in May 2011 — about a year after it purchased Flagship — is one of several large investment firms who have entered the auto finance marketplace. Other notable firms include Blackstone Group, which acquired Exeter Finance in 2011, and Kohlberg, Kravis, Robert & Company and Centerbridge Partners, which are investors in Santander Consumer USA.

Since their inceptions, Flagship and CarFinance have each established well-recognized and accepted term asset-backed securitization programs that have obtained ratings from multiple nationally recognized rating agencies. Each has also entered into bank warehouse facilities from some of the most prominent financial institutions in the world.

The combined company will operate as an independent auto finance source with an enhanced national presence and wide geographic diversity. On a combined basis, the platforms currently originate approximately $1.2 billion of annual volume and employ approximately 600 employees. The combined company will be headquartered in Chadds Ford, Pa., and will have operational offices in Irvine, Calif., Phoenix and Irving, Texas. It will also serve more than 7,700 automotive dealers nationwide, as well as from an active direct auto lending division.

“Combining with CarFinance at this point in the companies’ growth cycles will create a leading automotive finance company with increased scale and greater flexibility,” said Flagship CEO Michael C. Ritter, who will become the CEO of the combined company. “Importantly, as a combined company, we will be able to better serve our dealer base through our existing brands and products and continue to provide essential financing to under-served consumers so that they can procure transportation to perform necessary daily needs. I look forward to working closely with my new partners at CarFinance and our sponsors at ABV to realize the full potential of the combined company.”

Perella did not offer details regarding CarFinance CEO Jim Landy, who launched the finance company with the firm’s backing three years ago. The executive also served as CEO of Triad Financial Corp. from 1989 until the company was purchased by an investor group in 2005. During his tenure at Triad, he started RoadLoans.com, a direct-to-consumer finance source Santander now owns and operates.

“On behalf of the board of directors of CarFinance, I would like to thank Jim for his valuable contributions in establishing CarFinance as a leading indirect and direct lender to the auto finance industry,” Perella’s Schiff said. “We partnered with two of the strongest and most accomplished management teams in the sector in Flagship and CarFinance, and we appreciate their efforts in creating two of the most successful players in the space. We look forward to working with Jim and Mike as we bring together these two complementary platforms.”

Posted in Auto Industry NewsComments (0)

Fiat Says Merger into Dutch-Registered FCA Effective October 12

Italian carmaker Fiat said on Tuesday its merger into holding group Fiat Chrysler Automobiles (FCA) would be effective as of Oct. 12 after all conditions for the tie-up were met, reported Reuters.

Fiat completed the full buyout of its U.S. unit Chrysler this year and is now incorporating all its businesses under Dutch-registered FCA, paving the way for a U.S. listing of the world’s seventh-biggest auto group next week.

Fiat hopes the Wall Street listing will help fund an ambitious turnaround plan.

Fiat said no creditors had opposed the merger and the amount of money to be paid to shareholders that chose to sell their shares had not exceeded a 500 million euro ($631 million) cap set by the company.

Shares in FCA will start trading on the New York Stock Exchange on Oct. 13, Fiat said in a statement. The stock will also begin trading on the Milan bourse on the same day, subject to the market regulator’s authorization.

Current Fiat shares will last trade on the Milan bourse on Friday.

Posted in Auto Industry NewsComments (0)

Fiat Shareholders Came Close to Merger Upset

Fiat SpA shareholders came close to derailing a corporate reorganization on which the creation of the combined Fiat Chrysler Automobiles group depends, according to data the company released Thursday, reported The Wall Street Journal.

Investors in the Italian auto maker last week tendered shares worth €464 million ($608 million) as they exercised their right to sell their stock to the company, an amount just shy of the €500 million limit that Chief Executive Sergio Marchionne had set for any payout.

Mr. Marchionne had said that he would scrap the reorganization if the payout was any larger, at least temporarily halting the creation of Fiat Chrysler.

With the reorganization now going ahead, the merged company plans to list shares on the New York Stock Exchange Oct. 13, a move designed to give Fiat Chrsyler more flexibility in financing a multibillion-euro expansion plan involving the rollout of several new models.

Fiat also said Thursday that it would sell an unspecified amount of new bonds.

The reorganization involving Fiat and its 100%-owned Chrysler unit includes the merger of Fiat with a Dutch entity which will take the Fiat Chrysler name.

Fiat plans to move its legal headquarters to Amsterdam and take up tax residency to the U.K. as well as have its primary stock market listing in New York.

From Sept. 5 until Oct. 6, Fiat will offer the tendered shares back to shareholders at the predetermined exit price of €7.73 a share. Fiat shares traded in Milan at €7.54 early Thursday.

Fiat said the sale of new debt would come in the form of the reopening of a July bond issue.

At that sale, Fiat sold €850 million in bonds maturing in 2022 that pay 4.75%. The final terms and value of the new bond sale will be based on market conditions at the time of pricing, Fiat said.

Posted in Auto Industry NewsComments (0)

Fiat Chrysler Denies Report of Merger Talks with VW

Fiat Chrysler has denied a magazine report saying it’s in merger talks with Volkswagen, while the German carmaker said it had no takeovers on its agenda, reported Reuters.

Germany’s Manager Magazin said on Thursday Volkswagen (VW) Chairman Ferdinand Piech had held talks with the owners of Fiat Chrysler about buying all or part of the group that was formed this year from the merger of Italian and U.S. carmakers.

The magazine cited unnamed company sources.

However, a VW spokesman said Europe’s biggest carmaker was focused on delivering improvements at its existing operations.

“There are currently no M&A (merger and acquisition) projects on the agenda,” he said. “We are now focusing on boosting efficiency across the group.”

The Agnelli family’s holding firm Exor, which owns a 30-percent stake in Fiat Chrysler, denied any talks had taken place, as did Fiat Chrysler.

Shares in Fiat Chrysler jumped 5 percent to 7.98 euros on the report, but had retreated to stand up 2.2 percent by 1352 GMT. VW’s stock was 1.8 percent lower.

VW Chief Executive Martin Winterkorn said in March the carmaker, though hoarding almost 18 billion euros ($24 billion) in cash, had no plans to expand the group through acquisitions as it was focusing on integrating its 12-brand network.

VW has since sealed a 6.7-billion euro buyout of minority shareholders at Swedish truck division Scania to forge a long-planned alliance of its truck brands.

The report could suggest “diverging views” between VW’s management and the supervisory board about the carmaker’s future course, said Arndt Ellinghorst, a London-based analyst at investment researchers ISI Group, at a time when Winterkorn, 67, and Piech, 77, are soon likely to face a debate over succession.

Rather than talking about further expansion, top managers at VW – concerned that profitability gains aren’t keeping pace with the company’s steadily-growing size – have been pushing a new efficiency programme that includes 5 billion euros of cost cuts per year at the core passenger-car brand.

Earlier this month, VW also denied a report it was planning a bid for U.S. truck maker Paccar next year.


“The risks from integrating Italian plants and managing a U.S. business are material and we do not believe that the potential benefits justify the risks,” Ellinghorst wrote in a note to clients.

A person familiar with the situation told Reuters that VW would more likely bid for Fiat assets such as Magnetti or Alfa Romeo rather than the entire company.

A member of VW’s supervisory board, which oversees the management board, said the 20-member panel had at no point of time had any discussions about a purchase of Fiat.

Still, Piech and Winterkorn have repeatedly expressed interest in Alfa Romeo despite rebuttals from Fiat CEO Sergio Marchionne.

Manager Magazin said VW was hoping to use Chrysler’s U.S. distribution network to help solve its own problems in the world’s No. 2 auto market where flagging sales of the VW brand in January sparked the ouster of VW’s regional chief.

However, VW’s U.S. troubles “are more image and pricing problems and not so much problems of distribution and manufacturing,” an auto analyst said. “Buying Chrysler would not really help VW.”

Fiat took full control of Chrysler at the start of 2014, creating the world’s No.7 auto group, and plans to list the merged Fiat Chrysler Automobiles in New York later this year.

Chief Executive Sergio Marchionne has said he wants Fiat Chrysler to follow bigger rivals such as VW by building global brands and strengthening its position in the fast-growing and high-margin market for premium cars.

The company is counting on its founding merger and a U.S. listing to help foot the bill for its 48 billion-euro plan to grow net profit five-fold and sales by 60 percent by 2018.

While rumours of a potential Agnelli family exit have surfaced over the years in Italian press, Exor has repeatedly said the stake remained a strategic investment for the family.

Manager Magazin also said VW and Fiat Chrysler’s owners were far from reaching an agreement about a possible price.

Posted in Auto Industry NewsComments (0)

Page 1 of 212