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Hyundai to make bid for FCA by May 2019?

by Ronan Glon

Insiders say FCA\'s top shareholders are aware the group is going into a perfect storm.

Hyundai will bid to buy Fiat- Chrysler Automobiles (FCA) before May 2019, according to sources familiar with the plan.

CEO Chung Mong-koo is patiently waiting for FCA's stock price to fall before taking action. The Asia Times learned he'll make his bid between this summer and May 2019, when Sergio Marchionne retires from his position as FCA CEO. We don't know how much Mong-koo is willing to pay for the company yet. As of writing, FCA shares trade for $18.89 on the New York Stock Exchange (NYSE).

The publication adds the merger would please FCA's controlling shareholders. John Elkann, a direct descendant of Fiat founder Giovanni Agnelli, allegedly has little interest in FCA (or cars in general) and prefers the media industry. Marrying his family's firm with Hyundai would provide a quick and easy solution to several long-standing problems without putting profits at risk.

Notably, the merger would give FCA plug-and-play access to electric powertrains, modern vehicle platforms, and in-car connectivity technology while opening the door to the lucrative southeast Asian market, a region it has historically struggled in. On the other hand, Hyundai would be able to expand its truck portfolio. Both automakers would also benefit from economies of scale.

"Elkann is well aware that FCA is going into a perfect storm. Lack of new models, mediocre technology in relation to peers and no real EV [electric vehicle] strategy, all on top of rising oil prices," an anonymous insider told Asia Times.

We've heard rumors of Hyundai taking over FCA before; we reported executives were evaluating a full takeover in September of 2017. Both companies said the rumors were false and moved on but the tale continued to play out behind the scenes. Asia Times' source revealed Machionne covertly released a great deal of details about Great Wall's interest in the Jeep brand to motivate Hyundai to make a move sooner rather than later. It sounds like the strategy worked.

Neither company has commented on the reports.