Sergio Marchionne, CEO of Fiat Chrysler Automobiles, is taking another swing at trying to promote the idea of a merger with General Motors.
Marchoinne, in a story published Sunday evening by Automotive News, asserts that a merger between the two automakers could generate up to $30 billion annually in earnings before taxes.
The idea isn't new, but Marchionne's estimates of potential profits and his forceful tone are. The outspoken CEO sent GM CEO Mary Barra an email earlier this year outlining his idea for a merger of the two automakers and the reasons it makes sense. Since then, Barra has said both publicly and privately the Detroit automaker has no interest in exploring the idea.
"We already have scale and we are leveraging that scale," Barra said in June. "When you look at the last several years we have been merging with ourselves."
By mid-summer, it appeared that Marchionne was backing away from the idea -- at least in the near future. But he took a more aggressive tone in an interview published by Automotive News..
"Look, the combined entity can make $30 billion a year in cash. Thirty. Just think about that [expletive] number," Marchionne told the publication. "In steady-state environments, it'll make me $28 to $30 billion," at a seasonally adjusted annual selling rate of 17 million new cars and trucks in the U.S.
Marchionne stopped short of saying he is pursuing a hostile deal with GM but said the automaker's board and executives cannot avoid a discussion of the potential cost savings.
"Not hostile," he told the publication. "There are varying degrees of hugs. I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you. Everything starts with physical contact. Then it can degrade, but it starts with physical contact."
GM said it has already reviewed Marchionne's proposal.
"Our management and board are always working to maximize shareholder value. After we completed a thorough review of a possible merger with FCA, we concluded that executing our current plan is the best way to create value for GM stockholders," GM said in an emailed statement Sunday.
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