Fiat Chrysler Automobiles NV on Thursday brushed off a shock lawsuit from General Motors Co and said it was confident of reaching a binding merger deal with Peugeot owner PSA Group by the end of this year to create the world’s fourth-largest car maker.
GM filed the lawsuit in the United States on Wednesday, alleging FCA had bribed United Auto Workers (UAW) union officials over years to corrupt the bargaining process and gain advantages, costing GM billions of dollars.
FCA said the suit, seeking substantial damages, was ‘meritless’ and appeared intended to disrupt the Italian-American company’s planned $50 billion merger with France’s PSA.
‘The GM lawsuit will be dealt with in appropriate places, but as we’ve said already it is absolutely groundless and so it does not worry us,’ FCA Chairman John Elkann told reporters at a strategy briefing for Exor, the holding company of the Agnelli family which is FCA’s largest shareholder.
‘Looking at how teams are working, both in FCA and PSA, I am encouraged to say that between now and year-end, we’ll have a binding memorandum signed,’ he added.
JP Morgan auto analyst Ryan Brinkman said in a research note that GM could seek at least $6 billion in damages, but added a trial could be years away. He also noted that if GM’s allegations were vindicated, Ford Motor Co could have a claim. Ford declined to comment.
At a Barclays auto conference in New York on Thursday, GM Chief Executive Mary Barra defended the lawsuit, noting she has often said: ‘‘Give us a level playing field, and General Motors will compete, and we’ll win.’ And so when we saw facts indicated that that was not the case, we felt it was in the best interest of all of our stakeholders in the company.’
GM shares fell 1.7 per cent to close at $34.67 on Thursday, while Fiat Chrysler shares fell 0.5 per cent to $14.92 in New York. PSA closed nearly unchanged at 22.47 euros.
PSA declined to comment on the lawsuit and any potential impact on the merger talks.
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