Great Wall confirms interest in buying Fiat-Chrysler

Posted on 22 Aug 2017 by Michael Cruickshank

Chinese automotive manufacturer Great Wall Motor Co. is reportedly looking to buy European auto-making conglomerate Fiat-Chrysler Automobiles (FCA).

Great Wall Motors is China's seventh-largest automaker by sales. Image courtesy of Wikipedia.
Great Wall Motors is China’s seventh-largest automaker by sales. Image courtesy of Wikipedia.

After rumors had been circulating for several days, the Chinese company confirmed yesterday that it was interested in buying Fiat-Chrysler.

Nonetheless, it has provided no information on whether it will plan to buy the company outright, or simply take a controlling stake in it.

“The company has not built any relationship with the directors of FCA nor has the company entered into any discussion or signed any agreements with any officer of FCA so far,” Great Wall said in an English-language stock exchange filing according to Reuters.

Moreover, Fiat-Chrysler itself has stated publicly that it has so far received no actual offer from Great Wall, something which would be the first step towards a future acquisition.

Great Wall is presumably interested in the company due to its large portfolio of iconic car brands, under which it manufactures a wide range of vehicles.

These brands include its namesakes Fiat and Chrysler, as well as well-known SUV brand Jeep, utility vehicle brand Dodge, and the luxury Alfa-Romeo brand. Additionally, the company owns the sports car brand Maserati and sells trucks under the brand Ram.

Hugely costly

If Great Wall does go ahead and make a bid for Fiat-Chrysler, the company would need to raise a truly enormous amount of cash.

Recently, FCA was valued at approximately $20bn, as much as one and a half times the value of Great Wall, only China’s seventh largest automaker by sales.

For this sale to go ahead, it would need to be reliably proved that this level of investment was indeed on hand – no mean feat in a stagnating Chinese economy.

Regulatory nightmare

Getting the requisite money together for this purchase though would only be the first part of the battle. Gaining regulatory approval across several continents would be yet more complex.

FCA, which is nominally an Italian company, is headquartered in the Netherlands, but listed on the US stock exchange, meaning that at minimum the deal would require approval from the US, EU, and China.

Moreover, political pressure could derail any potential purchase, given that many would oppose iconic brands like Jeep – associated with the West’s military-industrial complex – falling into Chinese hands.