* FCA CEO sees fewer synergies from GM tie-up without Opel
* FCA CEO says GM remains most attractive tie-up option for
* GM says even less interested than before in merger with
(Adds GM saying they're not interested in paragraphs 11-12)
By Agnieszka Flak
GENEVA, March 7 Fiat Chrysler Chief
Executive Sergio Marchionne remains interested in a merger with
General Motors, saying on Tuesday that it still made
sense even after GM sold its European operations to PSA Group
Marchionne has long advocated more car industry mergers to
share the prohibitive costs of making cleaner and more
technologically advanced vehicles, but GM has firmly rebuffed
his previous approaches.
"I never close any doors. I may shamelessly try and knock
again ... on the GM door or any door if I thought it was a good
thing for the business. Absolutely, without even blinking,"
Marchionne told reporters at the Geneva car show.
"The desirability of GM as a potential merger candidate
FCA's share price shot up last month on the day news of the
talks between GM and PSA first emerged, with some analysts
suggesting GM could be tempted to subsequently regain a foothold
in Europe through FCA, which is more profitable than the Opel
business that has been losing money for many years.
Others, however, said GM would have even less interest than
before to combine with its smaller and heavily-indebted rival,
which controls only 7 percent of the European market and whose
operating profit margin of 2.5 percent there lags rivals.
"GM will de-consolidate a loss-making asset and improve
return on capital, something that investors have blamed the
company for in the last years, making a deal with FCA less
likely," said Angelo Meda, head of equities at Banor SIM, adding
that FCA's options were dwindling.
"Lagging behind peers on hybrid/electric vehicles, without a
deal in the next two to three years the main risk is a step up
in investments, which would dampen the already weak, compared to
peers, cash generation."
Marchionne said the PSA-Opel deal would reduce potential
synergies FCA-GM might reap from a tie-up by about 15 percent,
but the prospective benefits were still worth pursuing.
EVEN LESS INTERESTED
Industry sources said, however, that GM had no interest in
FCA, not least because any merger between the two big U.S.
carmakers would lead to major job losses and stiff union
GM and its board have consistently rebuffed Marchionne's
overtures, and the company's president did so again on Tuesday.
"We weren't interested before and we're even less interested
now," GM President Dan Ammann told reporters in Geneva.
Analysts also questioned why anyone would buy FCA now when
the price could be set for a fall - given that the North
American market where it makes 85 percent of its profits is
However, Marchionne also has his eye on other possible
partners, saying Volkswagen, could be an attractive
prospect. With PSA now set to become the second-biggest car
producer in Europe following the acquisition of Opel, the German
group could be interested in talks, he said.
"I have no doubt that at the relevant time they may show up
and have a chat," he said.
In the meantime, FCA plans to concentrate on completing the
shift of production at its plants in Italy towards higher-margin
vehicles such as Jeeps, Alfa Romeos and luxury Maseratis.
Production for its other cars would be moved elsewhere,
Marchionne said, adding that the popular Fiat Panda could be
made again at FCA's plant in Poland from 2020.
(Additional reporting by Danilo Masoni; editing by Greg Mahlich
and David Clarke)