Could Hyundai Actually Be Planning A Takeover Bid For FCA?

Hyundai is reportedly planning a takeover bid for Fiat Chrysler Automobiles as the exit of Sergio Marchionne as chief executive draws closer.

Sources close to the issue tell Asia Times that the bid will be launched this summer, before FCA’s annual shareholders’ meeting in May 2019 when Marchionne steps down. FCA’s shares are expected to take a hit during this time, therefore lowering its overall value.

The man driving the bid is said to be Paul Singer, the principal of Elliott Management. Singer is an activist shareholder in Hyundai with a stake worth $1 billion. He recently named Fiat Chrysler chief executive of Europe, the Middle East and Africa, Alrfredo Altavilla, as a board member of Telecom Italia, a company Singer also owns a major stake in.

Asia Times reports that Marchionne drew Hyundai’s attention by using interest from Great Wall Motor.

In recent years, Marchionne has been very open about wanting Fiat Chrysler Automobiles to merge with another large automaker. In 2015, he pursued a deal with General Motors, but the U.S. company openly turned him down.

Despite previous interest in acquiring Alfa Romeo, a merger between FCA and Volkswagen has also been shot down. Insiders say that any such deal would face fierce opposition in both Germany and Italy due to plant closures. Additionally, Volkswagen would be unlikely to consider such a massive deal as it continues to recover from the repercussions of dieselgate and pushes ahead with its electrification plan.

A merger between FCA and a Chinese automaker would probably be blocked by President Donald Trump through the Committee on Foreign Investment in the United States. The US-South Korean Free Trade Agreement makes a merger between Hyundai and FCA more likely, though Trump’s administration approval would still be necessary.

Hyundai spokesman Jim Trainor said the company does not comment on market rumors, neither denying or confirming that report.