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How Will GM Lawsuit Impact FCA-PSA Merger?

#Fiat #FiatChryslerAutomobiles #Chrysler


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The racketeering lawsuit General Motors filed this week against Fiat Chrysler Automobiles could rattle the merger FCA hopes to complete with PSA Group by year-end.

GM claims that FCA conspired with the United Auto Workers union, paying UAW leaders bribes for years in exchange for lower labor costs and cheaper production rules. If GM is correct, analysts say, the company could seek damages anywhere between $6 billion and $15 billion.

Analysts point out that if a hefty liability does result, PSA could use it to alter terms of the merger.

Other experts wonder whether GM filed the lawsuit to torpedo the merger entirely, perhaps by drawing the attention of the Trump administration. GM insists the two are unrelated.

But economic advisor Larry Kudlow already has signaled possible interest. He notes that China’s Dongfeng Motor Group is a major investor in PSA and would therefore become an influence in the merged companies.

Kudlow emphasizes that the White House is adamant about blocking Chinese business gains made at the expense of the American economy.


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