VW Says Acquisitions Not on Agenda as Fiat Denies Talks Report

Jul 17, 2014 10:08 am ET

July 17 (Bloomberg) -- Volkswagen AG said takeovers aren’t on the agenda at the moment after both Fiat SpA and its biggest investor denied a magazine report that Europe’s largest carmaker made an approach to buy all or part of the Italian competitor.

“We’re concentrating now on reaping efficiencies within the group,” a VW official said by phone, declining to comment further on the article published earlier today by Manager Magazin.

VW Chairman Ferdinand Piech, a member of the family that controls the Wolfsburg, Germany-based carmaker, has held various talks with associates and members of the Agnelli family about a takeover of Fiat, the Hamburg-based magazine reported on its website.

“Fiat states that they have not held discussions with Volkswagen regarding a potential merger,” the Turin-based manufacturer said today in a statement. A spokesman for Exor SpA, the Agnelli family investment vehicle that owns 30 percent of Fiat’s stock, also said no talks have taken place.

Fiat jumped as much as 5.1 percent to 7.99 euros, the biggest intraday gain since Jan. 2, and was trading up 1.8 percent at 4:04 p.m. in Milan. VW fell as much as 3.2 percent to 183.15 euros and was down 1.4 percent in Frankfurt. The German carmaker is valued at about 88.6 billion euros ($120 billion), while Fiat is worth 9.7 billion euros.

Global Goal

Volkswagen Chief Executive Martin Winterkorn is focusing on profitability as the company closes in on its goal of overtaking Toyota Motor Corp. as the world’s largest carmaker. The German manufacturer targets selling more than 10 million vehicles annually for the first time this year and is starting a program to cut costs and increase efficiency at its namesake brand by 5 billion euros by 2017.

After securing full control of Swedish truckmaker Scania AB in May, Volkswagen said it didn’t plan any large acquisitions in the near future as it focuses on integrating commercial-vehicle operations, which also include Munich-based MAN SE.

“Volkswagen has an urge to become the No. 1 global automaker, and an acquisition of that size would bring them to their target immediately,” said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt. “But real interest in Fiat as a whole is rather unrealistic and would entail many problems,” including Fiat’s struggles in Europe and potential antitrust issues in South America.

According to Manager Magazin, the Agnelli family would focus on Fiat’s Ferrari sports-car unit and withdraw almost completely from the remaining auto business, while Fiat’s Chrysler division could help VW’s efforts to grow in the U.S.

Dawn Showdown

There are a number of obstacles to any deal, including finances and divergent strategies pursued by Fiat and Volkswagen, the magazine said. Fiat is in the midst of completing its merger with Auburn Hills, Michigan-based Chrysler that would involve a listing on the New York Stock Exchange.

Piech and Fiat Chief Executive Officer Sergio Marchionne have sparred publicly in the past. The Fiat executive invited Volkswagen to a dawn showdown at the Paris auto show in 2012 after being irritated by comments from the German company’s executive. Piech has often expressed his interest in Fiat’s Alfa Romeo brand, which Marchionne has vowed to keep.

--With assistance from Dorothee Tschampa in Berlin.