That multi-billion dollar question is crucial to the short-term bull case for FCA, amid questions about how Great Wall, with a market cap well below its potential target, would finance the deal. Jefferies analysts predict the Jeep brand alone has an enterprise value of 17 billion euros.
As with most dating games, there’s also the thorny issue of timing.
Evercore Analyst ISI, Arndt Ellinghorst said in a note that he expects “FCA’s management would want to defer for another ~6 months, as the ongoing earnings improvements and deleveraging would enable the company to seek a better price.”
FCA appeared to back that view, writing earlier this week that it had not engaged with Great Wall Motor and remains “fully committed” to its 2018 plan with just six quarters left to completion.
Plus, the longer FCA keeps Great Wall waiting, the more time there will be for rival bidders to come forward.
“It would certainly put a value to what Jeep would be worth, then others would be able to consider if they want to step in … By all means, if Great Wall takes a step back, others will probably step forward,” Russo said.
Jefferies analyst Philipe Houchois agreed, telling CNBC “every car company is looking.”
Still, industry watchers agree there is no shortage of risks threatening to sink an acquisition, not the least of which is politics.
An analyst at Maybank Kim Eng, KL Leong, had this to say about the probability of Jeep coming under Chinese ownership: “It is a complicated deal involving many moving parts. I think it may take some time.”
