After learning over the weekend that Trump plans to call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, we learn that several Chinese companies may have submitted bids for Fiat Chrysler (FCA) in a deal that would include the company’s iconic Jeep brand. According to AutomotiveNews, at least one Chinese automaker made a bid earlier this month for FCA at a slight premium to the company’s prevailing market price but it was rejected for being too low.
Representatives of a well-known Chinese automaker made at least one offer this month to buy Fiat Chrysler Automobiles at a small premium over its market value, Automotive News has learned. The offer was rejected for not being enough, a source said.Meanwhile, other sources independently identified executives from other large Chinese automakers conducting their own due diligence on a potential purchase of FCA, including meeting last week with representatives of U.S. retail groups about a potential acquisition. A source said FCA executives have traveled to China to meet with Great Wall Motor Co. And Chinese delegations were seen last week at FCA’s headquarters in Auburn Hills, Mich.
It’s unclear which Chinese automaker or automakers are pursuing FCA. Different sources have pointed to involvement by different ones — Dongfeng Motor Corp., Great Wall, Zhejiang Geely Holding Group or FCA’s current joint venture partner in China, Guangzhou Automobile Group. But it is also unclear which company or companies are likely to follow through or succeed.
Unsurprisingly, FCA isn’t talking, nor are any of the four Chinese automakers. But if a sale proceeds, the quintessentially American Jeep brand — once owned by the Germans and most recently by the Italians/Dutch — may soon be owned by the Chinese.
According to AutoNews, any sale likely would involve FCA’s highly profitable Jeep and Ram brands, as well as Chrysler, Dodge and Fiat, but would exclude Maserati and Alfa Romeo which would be spun off.
Interest from China comes amid a push by the government to acquire international assets in order to gain further access to markets outside China.
A government directive dubbed China Outbound pushes Chinese businesses to acquire international assets from their industries and operate them “to make their mark,” much as Geely has done since acquiring Volvo in 2010. Bloomberg reported last week that Chinese companies plan to spend $1.5 trillion acquiring overseas companies over the next decade — a 70 percent increase from current levels.“Right now, Chinese automakers enjoy the full support of the leadership in Beijing to go and make it happen,” Dunne said. “That’s something brand new, and it’s really picked up since 2015.”
Along with Volvo, Dunne pointed to Italian tire maker Pirelli and German robotics giant Kuka as Chinese acquisitions supported by the China Outbound policy.
Of course, given Trump’s focus on domestic auto production and intellectual property violations by China, something tells us this particular deal will be somewhat ‘complicated’ politically. That said, FCAU shareholders seem to be somewhat optimistic this morning…
