Italy's Fiat denies media report of merger talks with Volkswagen aimed at Chrysler takeover
7/17/2014MILAN — Italian automaker Fiat and its main shareholder denied on Thursday a German media report that the company is in merger talks with rival Volkswagen.
Shares in Fiat briefly rose 5 percent, before closing up 1 percent at 7.70 euros, after Manager Magazin reported that the main shareholders in Fiat SpA and Volkswagen AG have had a series of talks about Volkswagen taking over all or part of Fiat, which controls Chrysler.
The report, which did not cite sources, said VW, the world’s No. 2 automaker, was interested in acquiring Chrysler to help it improve its struggling footing in the United States, and specified that Fiat’s Ferrari subsidiary would be excluded from any deal. Volkswagen has often expressed interest in Fiat’s sporty brand Alfa Romeo.
Fiat said in a statement no merger talks had taken place, a position that was repeated by its majority shareholder in a separate statement issued at the request of Italy’s market watchdog. Volkswagen had no immediate comment.
Fiat is in the process of completing a merger with Chrysler, which it took over five years ago, to create the seventh-largest global carmaker. Fiat shareholders are set to vote on the final merger Aug. 1.
Bernstein automotive analyst Max Warburton said such a deal “has a degree of industrial logic,” by giving Volkswagen the means to fulfill its ambition to become the world’s largest automaker. I would give it a 15 percent market share in the United States, ahead of Toyota, and a 30 percent market share in Europe.
On the Fiat side, Warburton noted that the Fiat-Chrysler project has left Fiat with a huge debt and big investments to make, adding “Fiat still faces a complex future.”