Great Wall Motor Pours Cold Water on Possible Deal With Fiat

Great Wall Motor Co. cooled prospects for a deal with Fiat Chrysler Automobiles NV, saying there are no talks and it may not pursue a takeover the Italian-American car manufacturer’s Jeep division.

Commenting just a day after expressing interest, Great Wall said there are “big uncertainties” whether it will continue to study Fiat Chrysler, the Baoding-based automaker said in a filing to the Shanghai stock exchange. The Chinese company’s efforts have “not generated concrete progress as of now,” and it has not established contacts with Fiat’s board.

Fiat Chrysler Chief Executive Officer Sergio Marchionne stoked deal speculation last month when he said the automaker will evaluate whether to spin off some businesses. The Jeep marque anchors the company’s mass-market car operations and has been a key focus of expansion. Reflecting the brand’s importance, Morgan Stanley estimates Jeep is worth 20.6 billion euros ($24.2 billion), about 4 billion euros more than the entire group’s market value.

Fiat shares reversed earlier gains to lose as much as 3 percent, trading down percent 0.7 percent at 11.36 euros as of 3:26 p.m. in Milan, valuing the company 17.6 billion euros. Great Wall, whose stock was suspended Tuesday, said trading in its shares will resume Wednesday.

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It’s unlikely Fiat would sell Jeep on its own, which would mean also taking on other brands like Dodge, Ram and Chrysler. That would risk. Great Wall could also have found it tough to obtain Chinese regulatory approval due to recent restrictions on capital outflow, Deutsche Bank AG analysts Vincent Ha and Fei Sun wrote in a report Tuesday. An acquisition would also require U.S. approval, which could be complicated under the current administration, they said.

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“We cannot ignore the potential policy hurdles involved in a potential cross-border M&A,” Ha and Sun said in the note. “The chance of a significant M&A for GWM is still remote.”

Great Wall’s shares were suspended from trading in Hong Kong and Shanghai on Tuesday pending a clarification of press reports. The automaker said on Monday that it was interested in buying Jeep. Fiat said there’s been no approach from Great Wall on Jeep “or any other matter relating to its business.”

— With assistance by Yan Zhang, and Tommaso Ebhardt