A recent report suggest Hyundai could launch a takeover bid starting the summer of 2018 if FCA’s stock price drops. This would dramatically alter the automotive market and make Hyundai the latest brand to try to control Chrysler.
The report in the Asia Times names unnamed sources saying activist fund Elliott Management is spurring the deal to takeover FCA. Elliott is lead by Paul Singer who pressured Hyundai in April to merge with Mobis and then demanded the company pay more its investors more than $10 billion in “excess cash” according to Car and Driver.
This isn’t the first time Hyundai and FCA have made headlines. In December 2017, Bloomberg reported both companies were in talks to co-develop hydrogen fuel-cell powertrains and transmissions. At the time, outgoing FCA CEO Sergio Marchionne said he saw the ““potential of a technical partnership with Hyundai.” He also dismissed any talk of a possible merger with Hyundai.
Marchionne has actively pursued a merger since FCA’s poor initial public offering. He has gone on record saying the automotive market has too many competitors and with economics of scale, a merger makes sense.
In 2015, he pursued General Motors in hopes of a merger and there have been rumors he did the same thing with Volkswagen.
Last August, Chinese automaker Great Wall considered purchasing Jeep.
It is widely thought the individual brands of Jeep, Ram and Dodge are more valuable on their own than the entirety of FCA.
A merger with Hyundai does make a lot of sense on paper. For example, Hyundai and Kia are really good at selling small cars something FCA doesn’t even offer. Also, the Genesis brand is aiming at a luxury market which is a weak spot for FCA. They have been trying to grow a luxury offering by reintroducing Alfa Romeo, but so far results have been mixed. Combining Alfa with Chrysler and Genesis into one luxury brand would really help simplify the brand and create a stronger portfolio.
On the flip side, Hyundai doesn’t sell pickups in the U.S. and they also don’t have any real good off-road vehicles. FCA has both and could fill this big gap for the Korean automaker.
What are the odds of this happening? It is likely a long shot right now, but a merger certainly seems to be in FCA’s future.