Fiat denies report of Volkswagen merger talks
Colleen Barry, The Associated Press
Published Thursday, July 17, 2014 2:53PM EDT
MILAN, Italy -- Italian automaker Fiat and its main shareholder denied on Thursday a media report that the company is in merger talks with rival Volkswagen. The German carmaker also said it had no plans for mergers or acquisitions.
Shares in Fiat briefly rose 5 per cent, before closing up 1 per cent at 7.70 euros, after Manager Magazin in Germany 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 said in a statement that "there are currently no M&A projects on the agenda. We are now focusing on boosting efficiency across the group." M&A is shorthand for mergers and acquisitions.
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 "it seems the deal is not real" based on the Fiat shareholder statement, but added that would have "a degree of industrial logic" by giving Volkswagen the means to fulfil its ambition to become the world's largest automaker. It would give it a 15 per cent market share in the United States, ahead of Toyota, and a 30 per cent 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."