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Hyundai-FCA Merger Rumours: True or False?

Long weekends are sometimes an opportunity to witness interesting twists. As we prepared to leave the office on Friday, we began to hear whispers that Hyundai was quietly planning the purchase of the FCA Group (Fiat Chrysler Automobiles), or at the very least, some type of merger with the Italian-American manufacturer.

Then, on Monday, the Korean company issued strong denials, claiming via a spokesperson that the rumours were "totally groundless".

So, we have nothing official to announce, but since this is not the first time we've heard about a takeover of the FCA group by the Korean giant Hyundai, there is reason to remain interested. 

What sparked things off last week was that a Hyundai employee claimed that his employer had worked out a strategy to purchase FCA at a discount; predicting that the company's shares would fall due to a lack of new models, "mediocre technology", and a poor electric-vehicle strategy.

Some of these arguments may seem a little weak, but others are not lacking in premise.

At the very least, these rumours of a merger between the two groups date back to 2017.

According to what was said last week, Hyundai's CEO will wait for the right moment to submit an offer, timing that might coincide with the retirement of FCA boss Sergio Marchionne. Knowing that he intends to step down in May, 2019, a potential offer could arise around that time. 

Adding credibility to the rumours, there are logical reasons behind such a move. On one hand, FCA would have access to more modern platforms and more advanced electric vehicle technology, not to mention better penetration to the Asian market. On the other hand, Hyundai would gain access to areas where they lack strength, namely light trucks and 4x4 vehicles, the Jeep Wrangler in particular. 

That's why every rumour associating Hyundai with FCA gets our attention. And, as it is often said, where there is smoke, there is fire.

Finally, we can't overlook the fact that Hyundai has great global ambitions. By getting their hands on the FCA group, they would become the world's largest automaker, dethroning Volkswagen. 

For that reason alone, the situation must be followed closely.