FCA: the future after Marchionne

Fiat

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It has been no more than 8 months, even if it seems more, from when the Market value of FCA with Ferrari and CNH has reached the value of 73 billion dollars compared with the 63 billion of GM; which once was THE colossus of the automotive industry.

The capitalization of FCA was close to $ 29.5 billion; after the spin-off of Ferrari that alone had a value of about 18 billion.

With the death of Sergio Marchionne, FCA has experienced a stop on the stock market, so much so that last July 25 a historic overtaking took place at Piazza Affari (the Italian stock exchange in Milan); for the first time, the capitalization of Ferrari has exceeded, even if only of 20 million, the capitalization of FCA.

It was the day after the death of Sergio Marchionne and the cut of 2018 estimates by the new CEO Mike Manley, when FCA lost 3.7 billion of capitalization stopping to 21.679 billion; while Ferrari limited losses by capitalizing 21.699 billion.

Ferrari, after the IPO on Wall Street, arrived to Piazza Affari with a price of 43 euro per share, and today, after a long journey, it stands at around 112 euro per share.

Today, although the FCA group has a net profit of 5 billion and zero debts and it is independent, the hypothesis of further spin-offs of the “jewels” Jeep, RAM and Alfa Romeo – Maserati are becoming more insistent.

With these spin-offs, and with the imminent one of Magneti Marelli, EXOR could collect far more than 25/27 billion euros of the market value.

Furthermore, this (25 billion dollars) was the price that last year Li Shufu – founder of Geely, controlling company of Volvo and the first car producer in China (12 production plants, > 50 thousand employees, 1.25 million of cars sold in 2017) and major shareholder of Daimler – offered to John Elkann to take over FCA.

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Instead, it would seem that the ideal partner to sell or split the majority stake of EXOR is another Asian group; Hyundai controlled by the Chung family.

Hyundai is a company that has to reorganize its assets, whose capitalization of the auto part on the stock exchange has a value of about 26 billion, and where the hedge fund Elliott, lead by the American investor Paul Singer, is scraping together the shares of the Korean car brand.

The Elliott Fund has recently come into the limelight in Italy, for having joined Telecom Italia, and for having won the TIM Board of Directors, in which it has included Alfredo Altavilla as an advisor, and lastly for having taken over the ownership of AC Milan.

Automotive

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It wouldn’t seem, therefore, such a fanciful hypothesis the return of the former COO EMEA Alfredo Altavilla at the leadership of a cleaned FCA-Hyundai or with spin-off Jeep / RAM and Alfa Romeo – Maserati.

The FCA-Hyundai union could have a capitalization of 50/60 billion euro going to stand out among the current Big in the automotive field by capitalization: in first position Toyota Motors with about 184 billion, followed by Volkswagen with 90 billion, despite the diesel-gate, and Daimler and BMW between 80 and 58 billion and to follow Honda 53 billion and GM 51 billion.

With a capitalization between 50 and 60 billion it could be a global group in Europe, America and Asia.

jeep

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Hyundai, in this way, would fill its gap of a premium brand, acquiring FCA with Alfa Romeo-Maserati and / or Jeep / RAM, running the internal restructuring, completing its range, but above all making a step change with the entry into the American market.

The sudden disappearance of Marchionne has accelerated all these hypotheses, and most likely we will be able to have memorandums of understanding in one or the other hypotheses already in the autumn of this year.

What is certain that the move by the Elliott Fund will take place, we can only expect when and what will be the response of EXOR.

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