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Fiat-Chrysler alliance in jeopardy due to Pentastar's IPO filing?

The four-year relationship between Fiat and Chrysler has thus far been beneficial for both automakers, but it has also proven to be a complicated battle between Sergio Marchionne and the United Auto Workers - the latter controlling the remaining 41.5 percent of Chrysler. With the recent filing for a US IPO, it looks like Marchionne and the UAW appear to be playing a billion-dollar game of chicken, with both sides far apart on how much the union's shares are worth. If it comes down to Chrysler's remaining stake being publicly traded, it could act to drive a wedge between the two companies.
According to Bloomberg, Fiat's chairman John Elkann says "if the IPO will take place, there will be two companies, and that's different than having a single one." Now, we're not great at math, but this sounds like the complete opposite of the full merger that Marchionne has been pushing for since taking the helm at Chrysler. Bloomberg notes that the UAW's shares should be worth around $5.6 billion, but Fiat could end up paying as little as $4.9 billion for Fiat to gain full control of Chrysler. A story by The Detroit News points out that Marchionne's "alleged low-balling" is just the latest hurdle the Auburn Hills-based automaker must overcome as its ownership is being fought over for the fourth time in 15 years.

Fiat Chrysler parts firm Magneti Marelli sold for $7.1B

TOKYO/MILAN — Japan's Calsonic Kansei, owned by U.S. private equity firm KKR, has agreed to buy Fiat Chrysler's Magneti Marelli for 6.2 billion euros ($7.1 billion) to form the seventh-largest independent car parts supplier. The first big deal by FCA's newly-appointed chief executive Mike Manley, who took over in July after the sudden death of long-time boss Sergio Marchionne, creates a company with revenue of 15.2 billion euros ($17.5 billion), the companies said. The newly formed Magneti Marelli CK Holdings is likely to cut costs through synergies and expand its customer base as components makers try to keep up with a shift by carmakers into autonomous driving, connected cars and electric vehicles. "This combination with Calsonic Kansei has emerged as an ideal opportunity to accelerate Magneti Marelli's future growth," Manley said on Monday of the FCA unit, which specializes in lighting, powertrain and high-tech electronics. FCA shares were up 5.2 percent at 0906 GMT as investors welcomed the hefty price tag, which will boost FCA's net cash position and raises expectations of a share buyback. "Getting this transaction completed at the price agreed is a significant early milestone and accomplishment," George Galliers, an analyst at Evercore ISI, said of Manley and his team's ability to match Marchionne's deal-making reputation. Marchionne had set in motion a process to spin off the unit and distribute its shares to FCA shareholders by early 2019, but said in June that FCA would still be "receptive" to an offer. Neither FCA nor its top shareholder, Fiat's founding Agnelli family, will have a stake in the combined business, but FCA said it would enter into a multi-year agreement to secure supplies to its plants and also to maintain operations and staff in Italy. Part of a global expansion KKR bought Calsonic from Nissan and other shareholders in 2016, saying it would help the parts maker, which relies on the Japanese carmaker for most of its sales, to expand globally. Calsonic has been in talks with FCA for months and made an initial 5.8 billion euro bid, sources have said. FCA does not break out earnings for Magneti Marelli, which sits within its components unit alongside robotics specialist Comau and castings firm Teksid. The unit employs around 43,000 people and operates in 19 countries. A takeover of Magneti Marelli had remained elusive as potential bidders were offering too little or were only interested in some parts of the business.

FCA chairman confirms Marchionne email to Barra

FCA CEO Sergio Marchionne is apparently backing up his talk about the need for consolidation in the auto industry with quite a bit of action. One recent report claimed that he even emailed General Motors CEO Mary Barra to make a deal. FCA chairman John Elkann has now confirmed that the correspondence actually happened, and that it wasn't a one-off occurrence. "It was not the only email, it was not the only conversation," Elkann (pictured above with Marchionne) said, according to Reuters. He is a member of the Agnelli family that has a controlling stake in FCA's stock and is supporting the idea of a merger. The automaker is willing to "act with determination if there are the prerequisites to do something that makes sense," Elkann said. Marchionne has been pushing for industry consolidation for months. While GM has been the main target of late, Ford was also rumored as a partner under consideration. In the past, there have also been reports of FCA negotiating with Volkswagen Group and PSA Peugeot Citroen for mergers, as well. According to Reuters, part of the reason for all of this effort might be as a way for Marchionne to ensure his legacy, though he's denied that. He's reportedly considering retiring after 2018. In his opinion, consolidation is needed because automakers are investing too much money to achieve the same goals. The situation would be better after mergers, and he predicts something to happen before 2018. Related Video: News Source: ReutersImage Credit: Massimo Pinca / AP Photo Earnings/Financials Chrysler Fiat Sergio Marchionne FCA merger John Elkann