Maybe Sergio Marchionne is banking on a loss of institutional memory at General Motors. That’s the only way I can see that he might expect GM to consider buying Fiat Chrysler.
Perhaps Marchionne sees an opening because the Whitacre-Akerson administrations purged nearly all the old GM executive team. You know, the ones who twitch when they hear the words “GM-Fiat alliance” -- or, even more chilling, “put option.”
To recap the tangled tale, in 2000 GM and Fiat entered into an alliance, with GM buying 20 percent of Fiat. It was an era of escalating alliances and acquisitions, and there was an industrywide push to create high-volume platforms.
Fiat and GM quickly merged purchasing and powertrain operations. GM execs have always cited benefits from these units, most notably purchasing savings and access to Fiat’s 1.3-liter diesel engine and six-speed transmissions.
But then there was the put option.
This feature of the original deal allowed Fiat to “put” the remainder of Fiat Auto to GM; in other words, to require GM to buy the whole money-losing shebang. If GM refused, it would pay $2 billion to assuage Fiat’s diminished self esteem, or something.
Which is precisely what happened in 2005. And, yes, the Fiat CEO who squeezed the full $2B out of GM was none other than Sergio Marchionne.
Now, Marchionne was merely enforcing a deal that GM had willingly signed. And the idea of a GM-Chrysler merger was explored as both companies slid towards bankruptcy. So perhaps there’s still a flicker of interest.
GM may not be interested in talking to anyone about a merger. But it’s especially hard to imagine GM taking a call from Sergio.