Fiat Chrysler (FCAU) Stock Surges On Chinese Buyout Interest
Zacks Investment Research | Aug 14, 2017 12:26AM ET
Shares of Fiat Chrysler Automobiles (NYSE:FCAU) soared 8% in morning trading on Monday following the news that the company turned down a buyout offer from an unnamed Chinese automaker because it wasn’t high enough.
According to Automotive News , the unnamed firm made Fiat Crysler an offer slightly over the company’s market value this month. While it’s unclear which company made the offer, Dongfeng Motor Corp, Great Wall Motors, Zhejiang Geely Holding Group, and Guangzhou Automobile Group are all reportedly in discussions to acquire Fiat Chrysler.
If a sale does go through, Fiat Chrysler would sell its profitable Jeep and Ram brands, as well as Chrysler, Dodge, and Fiat. However, the deal would exclude Maserati and Alfa Romeo.
Fiat Chrysler has been up for sale for over two years now, but the company has received no serious offers. CEO Sergio Marchionne has been working to make the company more efficient to appeal to buyers.
The Chinese government has been pushing Chinese businesses in recent years to acquire international assets, such as Geely’s acquisition of Volvo in 2010. Just last week, Bloomberg reported that Chinese companies plan to spend $1.5 trillion acquiring overseas companies over the next decade, 70 percent more than the last ten years.
FCAU remains a Zacks Rank #3 (Hold). With a VGM score of ‘A,’ our consensus estimates show that the company will have strong year-over-year earnings growth for the current year.
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