Fiat Chrysler shares surge 22%; company won't comment on talks

Shares of Fiat Chrysler Automobiles surged more than 20% this week on heavy trading volume, raising the possibility that a potential acquirer is buying shares.

Under U.S. securities law, any investor who acquires 5% or more of a publicly traded company must disclose that holding and any additional shares thereafter. So far no one has made that disclosure.

The automaker's largest shareholder is Exor, an Italian investment company controlled by the Agnelli and Elkann families. The fund owns 25.3% of FCA.

FCA shares rose 5.4% Friday to close at a record high of $21.77. Since Tuesday, the stock has risen 22%. In each of the last three days, more trading volume has ranged between 10.6 million and 14.3 million shares, well above the average daily volume of 3.1 million.

By contrast, Ford and General Motors shares have gained 5.6% and 7.5%, respectively over that period, on light trading.

An FCA spokesman declined to comment on whether the company was currently in talks with a potential partner or acquirer.

CEO Sergio Marchionne has looking for a buyer for more than two years. He plans to retire by 2019 and the company has not signaled who might succeed him.

In May 2015, Marchionne pleaded with competitors to explore mergers and partnerships to deal with the rapidly rising cost of global manufacturing and new autonomous vehicles technologies.

Last August, a spokesman for Great Wall Motors, a Chinese manufacturer that sells mainly SUVs, said his company was interested in FCA's Jeep brand.

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Last March at the Geneva auto show in Switzerland, Marchionne said, "I have no doubt that at the relevant time Volkswagen may show up and have a chat" for a merger. He said it in the context of General Motors sale of its Opel and Vauxhaul brands to PSA.

One month later he backed off, warning, "we need to be very careful that we don’t start unrealistic dreams about consolidation."

Then in early December he said FCA could potentially partner with Hyundai on hydrogen fuel cell technology.

On Wednesday, FCA reported its December sales in the U.S. fell 11% from a year earlier. But it is about to unveil a redesigned Ram pickup at this month's Detroit auto show. A redesigned Jeep Wrangler goes on sale soon.

While North America has generated most of the automaker's profit since Fiat took control of Chrysler following its 2009 taxpayer-funded bankruptcy, FCA doubled its operating profit in Europe, the Middle East and Africa from 2015 to 2016, and is expected to show an increase for 2017 when it reports fourth-quarter results, said Richard Hilgert, a Morningstar analyst in Chicago.

Marchionne has talked about spinning off its Magneti Marelli components unit.

How could that deal raise the stock price?

"That would be like taking a car apart, selling the parts and realizing you get more than the price of selling the car," said Hilgert.

Maryann Keller, a former industry analyst and founder of MK&A Global Automotive Strategy, downplayed acquisition speculation. She said selling off nonessential holdings such as Magneti Marelli, paying down debt and a much lower tax rate on its U.S. earnings are driving the stock price.

"If someone were truly going to make a bid for FCA, they wouldn't be silently buying shares. They would be talking," Keller said. "The Chinese are not going to buy in dribs and drabs."

Despite is smaller scale, FCA was ahead of the curve by halting sales of small and midsize passenger cars in the U.S.

Unlike General Motors, Ford, Toyota, Nissan and others, FCA has outsourced its autonomous vehicle effort to Waymo, the Google spin-off, to which it has provided more than 500 Chrysler Pacifica minivans that Waymo equips with the sensors and navigation components. Waymo is testing those vehicles in the Phoenix area and elsewhere.

As a result, FCA is spending much less than competitors on this technology that initially will be introduced in ride-sharing and delivery fleets.

Contact Greg Gardner: 313-222-8848 or ggardner99@freepress.com. Follow him on Twitter @GregGardner12