FCA To Merge With PSA

spoon059 wrote:
Bonjour.

What I always find interesting is why you need to "merge" with another company. The new owner is simply going to get rid of failing lines, streamline process and find a way to turn a profit. You don't need a merger for that, you need competent management for that. Save the time, effort and money of a merger and hire a CEO that will do what needs to be done.

A merger generally happens when a company wants to enter into new markets or expand their network, but does not have the capital to do it. So they generally will find another company to merge with to combine assets to enter these markets or expand their network. It is beneficial to both. This is why FCA has been looking for another company to merge with for a while now, especially one that already has a presence in upcoming markets such as China.

The Fiat and Chrysler merger was another example. Fiat was wanting to expand their presence in the US for a long time. Chrysler also wanted to expand into more European markets. So they merged and the Chrysler side became FCA USA and the the Fiat side became FCA Italy. The previous CEO came from Fiat while the current CEO is from Chrysler.

I will add that this merger would have probably never happened if the Obama administration would have never allowed the US treasury to sell the Chrysler shares it held to Fiat. If they would have kept them just a few more years, Chrysler would have been able to pay it back and then some due to the success from Ram and Jeep had in the following years. Although, if that didn't happen, then we would not have things such as the Ecodiesel or ZF 8-speed and some of the failing models and brands would probably still be here so there were some pluses to the merger for the Chrysler side.