Great Wall Motor Corporation of China is interested in buying Jeep, the crown jewel of Fiat Chrysler Automobiles NV and a world-wide symbol of American military and manufacturing might. This is the latest sign of an industry in the midst of a global reshuffling.
The Chinese suitor plans to make a bid for Fiat Chrysler’s lucrative Jeep brand, known for rugged sport utilities that rose to prominence in World War II as the can-do vehicle of the U.S. military. Since the company spun off Italian sports-car maker Ferrari SpA into a separate public company last year, analysts say Jeep and the Ram truck division now deliver nearly all of Fiat Chrysler’s 6 billion euros ($7.1 billion) in annual operating profit.
Jeep sold 1.4 million globally a year—more than almost any other U.S. brand.
Great Wall’s interest arose after years of speculation regarding which global company would emerge as a buyer for some or all of Fiat Chrysler’s brands. Fiat Chrysler Chief Executive Sergio Marchionne has unsuccessfully courted GM as a partner, and Volkswagen AG and France’s Peugeot have been considered by industry analysts to be alternative suitors.
Great Wall hadn’t delivered an offer as of Monday, according to Fiat Chrysler officials. It wasn’t clear whether the company is considering selling what many view as its most valuable division.
Jeep is likely worth more than the $20.7 billion valuation investors attribute to the company’s publicly available shares traded on the New York Stock Exchange, according to recent Morgan Stanley analysis. Great Wall, with a $16 billion market value, could struggle to gather the financing needed to pluck Jeep from Fiat Chrysler investors, which include controlling shareholder Exor SpA.
Fiat Chrysler shares rose 6.9% in Monday trading in the U.S.
If this deal sail through, it wouldn’t be the first by a Chinese carmakers. Zhejiang Geely Holding Group’s revival of Volvo Car after buying it from Ford Motor Co. in 2010. Though an earlier proposed acquisition of Hummer SUV brand from General Motors Co. by by Sichuan Tengzhong Heavy Industrial Machinery in 2009 failed amid regulatory disapproval.
About half of the Jeeps sold world-wide are still built in the U.S., as production has expanded in Mexico, Italy, China and India. The Wrangler, a boxy 4×4 most often associated with Jeep, is built in Toledo, Ohio in a dedicated factory and has been retooled for the coming model year. About 14,000 U.S. workers are employed at factories in America that make Jeeps, which are sold at 2,360 outlets in the U.S.
Fiat bought a stake of Chrysler in 2009 after Chrysler’s taxpayer-funded bailout and its founding family now owns 42.6% of the merged Fiat Chrysler’s voting rights through a holding company.
