The CEO of Fiat Chrysler Automobiles NV (NYSE:FCAU) recently tried to pitch a merger proposal to General Motors Company (NYSE:GM).
Sergio Marchionne, who is the acting Chief Executive of FCA, forwarded his suggestion to GM’s CEO, Mary Barra two months ago in an email, suggesting that the two firms should form a conglomerate. According to a report from the New York Times, Marchionne’s suggestion was rejected.
According to sources familiar with the email, its content touched on how a merger between the two automotive companies would be beneficial for both of them. It cited that the merger would allow them to consolidate resources and save a lot of money. It also suggested that a Fiat Chrysler and GM merger would give both companies an opportunity to slash costs by the billions.
A merger between the two companies would be big news for the automotive industry. It would result into one of the biggest conglomerates in history. News about the proposed merger first came up in April. Analysts suggest that Fiat Chrysler was suggesting a merger as a strategy for FCA to seal out its weaknesses especially in the United States.
The merger suggestion might also be part of Marchionne’s plan to leave a reputable legacy before he retires in 2019. The New York Times reported that GM was not interested in taking part in forming a conglomerate.
Towards the beginning of May, Marchionne made a public request for a reduction in the number of automotive industries in the Market. His suggestion was based on the fact that it has been increasingly difficult for firms to thrive especially because of the existing stiff competition. His company has particularly been affected, and that has resulted in less than attractive quarterly financial reports.
During one of his presentations towards the end of April, he claimed that automotive companies had ignored his suggestion. He also said that he was planning to meet with Tech firms to discuss potential introductions that would suit vehicle buyers.