Hyundai's Getting Ready to Pounce on Fiat Chrysler, Report Claims

Fiat Chrysler Automobiles won’t comment on a report claiming Hyundai Motor Group plans to launch a bid for the automaker, but that’s what sources with knowledge of the matter tell the Asia Times.

The sources claim HMG CEO Chung Mong-koo is biding his time, waiting for FCA’s stock to fall before moving forward on the potential takeover. Reportedly, Hyundai could launch the bid within months.

FCA CEO Sergio Marchionne retires in April 2019, with his successor an unknown quantity at this time. If Chung Mong-koo truly wants a takeover, he’ll act before Marchionne steps down, the sources claim.

Apparently, the driving force behind a potential merger is Paul Singer, billionaire activist shareholder and Elliott Management principal. Singer holds a $1 billion stake in Hyundai. His ties to FCA are more personal, however. Singer recently took control of Telecom Italia, naming Alfredo Altavilla, head of FCA’s Europe, Africa, and Middle East regions, as one of its board members. Altavilla’s name has been mentioned as a possible Marchionne successor.

Apparently, there’s quite a bit of disagreement between Marchionne and FCA chairman John Elkann over who should fill the CEO’s shoes. “Marchionne is pushing for [FCA CFO] Richard Palmer, while Elkann wants an industrial CEO to take over such as Altavilla or [Ram/Jeep head] Michael Manley,” one FCA source told Asia Times.

The sources allege Elkann, who also heads Exor N.V. — an investment group controlled by the Agnelli family, which holds over 29 percent of FCA’s stock — is more interested in growing a media empire than controlling FCA. A merger with Hyundai would give FCA access to the electric vehicles its truck-heavy portfolio generally lacks. (The money-losing Fiat 500 EV, FCA’s only North American EV, was famously panned by a scornful Marchionne.)

Marchionne, of course, is very fond of seeking mergers. Potential tie-ups with General Motors and Volkswagen Group never got off the ground, but sources claim the CEO used interest from China’s Great Wall Motor “as a stalking horse” to catch Hyundai’s eye and soften the Trump administration’s reaction to a future, non-Chinese takeover.

As we said, the automakers aren’t talking, so we’re left waiting to see if anything comes of this.

[Image: Fiat Chrysler Automobiles]