Fiat Chrysler Automobiles NV on Thursday turned down a lawsuit from General Motors and stated it was sure about reaching a binding merger deal with Peugeot owner PSA Group by the end of 2019 to create the world’s fourth-largest automaker.
General Motors submitted the lawsuit in the United States on Wednesday, accusing FCA of having bribed United Auto Workers (UAW) union officials over years to corrupt the bargaining process and gain more advantages, costing General Motors billions of dollars.
FCA stated the suit, seeking substantial damages, lacks any merit and appeared intended to disrupt the company’s planned $50 billion merger with PSA.
“The GM lawsuit will be dealt in the correct venues, but as we’ve said already it is absolutely groundless and so it does not worry us,” stated FCA Chairman John Elkann to the reporters at a strategy briefing for Exor, the holding company of the Agnelli family which is the largest shareholder of FCA.
“Seeing 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,” Elkann added.
JP Morgan auto analyst Ryan Brinkman stated in a research note that General Motors could seek no less than $6 billion in damages, but added a trial could be years away. He also added that if General Motors’ accusations were vindicated, Ford Motor could have a claim.
Ford refused to comment.
At a Barclays auto conference in New York on Thursday, CEO of General Motors Mary Barra defended the lawsuit, adding she has often stated: “‘Give us a level playing field, and General Motors will rival, and we’ll win.’ And so when we observed facts indicated that was not the case, we felt it was in the best interest of all of our stakeholders in the company.”
PSA refused to comment on the lawsuit and any possible effect on the merger talks.
