Fiat Chrysler Merger With GM Still A Possibility

By George Polgar

PHILADELPHIA (CBS) - Rebuffed in public by General Motors brass, repeated overtures by Sergio Marchionne of Fiat Chrysler Automobile (FCA) proposing a combination of the two auto giants, suggests that the stage is set for a big play – and possibly an ugly fight.

Though GM CEO Mary Barra summarily dismissed the idea proposed by FCA boss Marchionne in an email, that doesn't completely end the discussion. As a public company with a board of directors and many stockholders, including activist investors, Marchionne could force the issue and commence the classic hostile takeover.

Though about to take a huge hit, with a likely multi-billion dollar Federal fine for wire fraud in connection with the ignition defect recall, and what is clearly emerging as a botched cover-up, General Motors is in strong shape in the marketplace, which would make any takeover bid challenging.

With fuel prices low in recent years due to world oversupply, GM's strength in the SUV and pick-up truck segments is delivering high margin sales, bolstering nearly $3 billion in profits in 2015. Though worldwide production integration could yield economies, product overlap in such a giant combination would be unwieldy.