For more than two years, FCA has been FSBO — that’s For Sale By Owner — with no serious offers.

Not anymore.

Representatives of a well-known Chinese automaker made at least one offer this month to buy Fiat Chrysler Automobiles at a small premium over its market value, Automotive News has learned. The offer was rejected for not being enough, a source said.

Meanwhile, other sources independently identified executives from other large Chinese automakers conducting their own due diligence on a potential purchase of FCA, including meeting last week with representatives of U.S. retail groups about a potential acquisition. A source said FCA executives have traveled to China to meet with Great Wall Motor Co. And Chinese delegations were seen last week at FCA’s headquarters in Auburn Hills, Mich.

FCA shares rose on the news, trading up 7.4 percent to $12.47 in New York as of 10:28 a.m. ET.

Chinese companies are under government pressure to expand outside China by acquiring foreign companies. FCA may be a perfect target, given that CEO Sergio Marchionne has focused on streamlining the automaker’s operations to make it enticing to a buyer, making bold moves such as exiting small cars and sedans and revamping the company’s manufacturing footprint.

It’s unclear which Chinese automaker or automakers are pursuing FCA. Different sources have pointed to involvement by different ones — Dongfeng Motor Corp., Great Wall, Zhejiang Geely Holding Group or FCA’s current joint venture partner in China, Guangzhou Automobile Group. But it is also unclear which company or companies are likely to follow through or succeed.

Unsurprisingly, FCA isn’t talking, nor are any of the four Chinese automakers. But if a sale proceeds, the quintessentially American Jeep brand — once owned by the Germans and most recently by the Italians/Dutch — may soon be owned by the Chinese.

According to one source, any sale likely would involve FCA’s highly profitable Jeep and Ram brands, as well as Chrysler, Dodge and Fiat, but would exclude Maserati and Alfa Romeo. Those two brands would be spun off, as was Ferrari, to maximize returns for Exor, the holding company controlled by the Agnelli family, which owns a controlling interest in FCA, the source said, speaking on condition of anonymity.

Why, after two years on the block, is FCA apparently drawing interest from at least one potential Chinese buyer now?

The answer: FCA’s global network and product — specifically Jeep and Ram — fit the requirements the Chinese government has set for attractive acquisitions.

Quality gap

Chinese automakers have openly dreamed of cracking lucrative North America for a decade, spending millions to display their vehicles at high-profile U.S. auto shows. Early efforts showed that Chinese automakers had a long way to go before they were ready to compete here.

But in more recent years — through knowledge and expertise gained via joint ventures with the world’s largest and most successful automakers — Chinese companies have closed the quality gap.

And the automakers feel like they finally have closed that gap enough to start selling their products in the U.S., said Michael Dunne, president of Dunne Automotive, a Hong Kong investment advisory company and an expert on the Chinese auto industry.

They also are under pressure from the government to expand beyond China, Dunne said.

A government directive dubbed China Outbound pushes Chinese businesses to acquire international assets from their industries and operate them “to make their mark,” much as Geely has done since acquiring Volvo in 2010. Bloomberg reported last week that Chinese companies plan to spend $1.5 trillion acquiring overseas companies over the next decade — a 70 percent increase from current levels.

“Right now, Chinese automakers enjoy the full support of the leadership in Beijing to go and make it happen,” Dunne said. “That’s something brand new, and it’s really picked up since 2015.”

Along with Volvo, Dunne pointed to Italian tire maker Pirelli and German robotics giant Kuka as Chinese acquisitions supported by the China Outbound policy.

Interest has been growing for some time. In May 2016, FCA hosted a high-level delegation from China at its North American headquarters, which included Hu Chunhua, a member of the Communist Party’s Politburo and secretary of the party’s Guangdong Provincial Committee. Also in attendance were Cui Tiankai, China’s ambassador to the U.S., and Zhang Fangyou, chairman of Guangzhou Automobile Group.

“The interest is real, no question,” Dunne said. “The complications are on the political side: What would this mean for a Chinese company to acquire an American automaker, no matter where its corporate headquarters is based?”

Turnkey operation

For a Chinese automaker that dreams of making a splash in North America, Europe and Latin America, FCA presents as close to a turnkey operation as exists.

Globally, FCA has 162 manufacturing operations — assembly, component, stamping and machining plants — and another 87 r&d centers. In North America, FCA has a network of about 2,600 U.S. dealerships, as well as extensive distribution networks in Canada and Mexico.

And unlike other, larger publicly owned automakers with similar global footprints, Marchionne and his bosses at Exor have made one thing clear: Write a big enough check, and the keys to FCA are yours.

When it became apparent in late 2015 that FCA’s attempts to merge with General Motors had been rejected and any effort to tie up with Volkswagen was shut down because of that automaker’s then-blooming diesel emissions scandal, Marchionne began focusing attention inward, looking at why his company had not been more attractive to potential partners. In early 2016, he began implementing radical changes to make FCA more appealing, especially to an Asian automaker, but also to Volkswagen.

First, FCA shocked the industry by ending production of its compact and midsize sedans in the U.S., the Dodge Dart and Chrysler 200. The cars had been among the first fruits of bankrupt Chrysler’s 2009 shotgun marriage to Fiat S.p.A., but both had disappointing sales.

At the same time, Marchionne expanded development for his two cash cows, Jeep and Ram. He retooled plants from unibody construction back to body-on-frame to expand production of the Ram 1500 and Jeep Wrangler, and he announced that, after years of consumer clamoring, Jeep would again build a pickup and would soon build big luxury Jeeps to compete with Land Rover.

Product development plans laid out in 2014 — to vastly expand the Chrysler lineup, for example — were scrapped. FCA’s North American product line would go where the money was: pickups, SUVs and the minivan.

Stretch goals

The transformation, which will be largely complete by 2018, will mean FCA showrooms will resemble those of a decade ago when gasoline prices spiked: full of SUVs, crossovers, minivans and pickups and devoid of anything smaller or more fuel-efficient. The transformation has helped FCA’s quarterly financials, and Marchionne says the automaker is on track to achieve in 2018 what had been widely considered pie-in-the-sky goals laid out in 2014.

FCA has also looked hard at shedding holdings not directly related to automaking as a way to free trapped value for shareholders. That could include separation from parts maker Magneti Marelli, casting specialist Teksid and automation provider Comau.

On a conference call with analysts last month, Marchionne laid out the strategy.

“In order to be fair to our shareholders, we need to make sure that we deliver as much value out of this venture as we can,” he said.

The prospect of selling FCA to a Chinese automaker has been on Marchionne’s mind awhile. In August 2015, months after he began his quest to merge or partner with another global automaker with his “Confessions of a Capital Junkie” presentation, and while he was launching his soon-to-be-rebuffed bid to merge with GM, the FCA CEO told Automotive News that he had closely studied potential tie-ups with numerous Asian automakers.

His conclusion: None of the Asian automakers was looking for partners.

He was asked: Anyone in Asia?

“I don’t think Asia is partnerable,” he said. “No, you can be acquired by the Asians. I think China will buy you.”

The article "Chinese automakers covet FCA" orginally appeared at Automotive News on 8/14/17.

This content is created and maintained by a third party, and imported onto this page to help users provide their email addresses. You may be able to find more information about this and similar content at piano.io