Marchionne puts the squeeze on GM; GM’s response: ‘Why bail out FCA?’ – Automotive News

Posted: Monday, August 31, 2015
“Look, the combined entity can make $30 billion a year in cash. Thirty. Just think about that [expletive] number,” he said. “In steady-state environments, it’ll make me $28 to $30 billion,” at a seasonally adjusted annual selling rate of 17 million.

Arndt Ellinghorst, head of global automotive research at Evercore ISI, says the target is realistic.

“A combined GM-FCA will generate almost $25 billion in EBITDA this year,” Ellinghorst wrote in an email. “If you assume some synergies and peak U.S. cycle market conditions then, yes, they could get to 30 billion in EBITDA.”

On background, a GM official said company executives have not seen Marchionne’s analysis of what a combined company would look like. But he expressed doubts about how Marchionne could hit his profit projection while keeping a promise made to dealers last week in Las Vegas not to impact retailers or cut manufacturing jobs.

Asked directly, a GM spokesman wouldn’t call Marchionne’s analysis wrong but said GM officials believe the company and its shareholders are better off on their own.

Marchionne said he has never met GM CEO Mary Barra.

“I’m not trying to date Mary, for the record, but I tried to get to see her.”

A GM spokesman said: “We’ve responded appropriately to any outreaches that he’s had.”

And if there is resistance to sitting down with FCA because of Marchionne’s reputation as a crafty and cagey deal-maker, Marchionne has an answer for that, too.

“Look, I’m a tough negotiator and people know it, right? I am who I am, but so what?” he said. “Send somebody else in. Send the shark. I’d come off the table.”

Marchionne insists there is too much to be gained. He said he is “not the guy at the corner who’s selling pencils. I tell you that you can make X billion more by being together, I guarantee you that I can carry half the market.”


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