Chinese bid for Fiat Chrysler + Ferrari, Alfa Romeo and Maserati?

A report Fiat Chrysler has snubbed a lowball bid from a mainland carmaker sent shares soaring. In theory, a combination could add up industrially, and perhaps financially. Trump would probably freak. Yet it might offer the best chance of preserving American jobs.

Fiat Chrysler boss Sergio Marchionne has said the car industry needs to come together, cut costs and stop incinerating capital. So far, his confessions have mostly fallen on deaf ears among competitors in Europe and North America. But it appears Marchionne has finally found a receptive audience – in China.

FCA shares soared Monday after trade publication Automotive News reported the $18 billion Italian-American conglomerate controlled by the Agnelli family rebuffed a takeover from an unidentified mainland carmaker. As ugly as the politics of such a combination may appear at first blush, a transaction could stack up industrially, and perhaps even financially.

Seeing storied Detroit brands like Jeep, Chrysler, Ram and Dodge handed off to a Chinese company would provoke howls among Trump’s economic-nationalist supporters. It might not play well in Italy, either, to see Alfa Romeo and Maserati answering to Wuhan instead of Turin – though Automotive News said they might be spun off separately.

Yet, as Morgan Stanley observes, “cars don’t ship across oceans easily,” and political considerations increasingly demand local manufacture of valuable products. Combining with General Motors, as Marchionne once proposed, would have led to massive job cuts and plant closures…

Source: Politics aside, Chinese bid for FCA has some merit – Breakingviews