Marchionne Wants Activists to Help Coax GM into a Merger with FCA

Fiat Chrysler Automobiles CEO Sergio Marchionne is urging hedge funds and other investor activists to help him convince General Motors Co. to merge with FCA, sources tell The Wall Street Journal.

Marchionne's increasingly strident calls for consolidation in the auto industry focus on over-capacity and duplicate product development costs currently shouldered by the world's largest carmakers. He estimates the industry is spending some $2.2 billion per week on product development work that could be more cheaply accomplished by pooling resources.

Marchionne has been rebuffed by senior auto industry executives. So now he is appealing directly to investors. The Journal's sources say Marchionne has been emboldened by the success of activist investor Harry Wilson in pressuring GM in March to buy back $5 billion of its stock. The sources say he believes another such investor might coax CEO Mary Barra to reconsider a GM-FCA merger.

But the Journal notes GM is well into a massive program to consolidate, streamline operations and rebuild its product lineup around truly global platforms. Marchionne believes GM's liquidity would be better spent expanding scale than buying back shares.