In a very detailed two-hour interview with Automotive News (AN) Marchionne says "I've offered to sit down with them and take them through the numbers. They won't listen. And that kind of abject refusal to engage ... the capital markets won't understand why you are rejecting the discussion."
In a follow up to our original story we reported why GM thinks it might be able to hold off FCA US' advances. Basically it comes down to the incredibly unusual bankruptcy deal GM was given in 2009. The old company was able to shed all its old debts, and protect itself from liability going forward by forming a "new GM." That is not that unusual. However, the new GM got to carry forward the losses of the old GM for federal taxes on profits. That is completely unique. That means that GM has the ability to generate many billions in un-taxable profits. A merger would presumably wipe out that protection. However, take a look at the image above. Remember the sweetheart deal the automakers got in 2009? Perhaps keeping the protection from taxation is also up for discussion?
Marchionne says he thinks that in a combined GM and FCA there are billions in savings. He says that he sees $30 billion in before tax profit in year one. Given that, it is easy to understand why he told AN "It would be unconscionable not to force a partner."
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