Chrysler Receives Competing Buyout Proposal From Founder’s Heir

Frank B. Rhodes, Jr., the great-grandson of Chrysler Founder, Walter P. Chrysler, has sent a proposal to the Fiat Chrysler Automobiles board that he believes is superior to the proposed merger with Dutch-based, STELLANTIS.

Fiat Chrysler Automobiles (FCAU) signed a 50-50 merger agreement with PSA Group, legally known as Peugeot, in December 2019, to create a Dutch-based multinational automotive manufacturing corporation called STELLANTIS.

Rhodes has filed an objection to the STELLANTIS merger and advised U.S. Senators to block the merger, which would exclude America from future profits and technologies.

Rhodes says, “This alternative proposal is in my opinion superior to the planned merger and would result in the return to the United States of the Chrysler-Dodge-Jeep-Ram Brands and away from the proposed Chinese, and foreign control as proposed in the Merger.”

Rhodes recommends that the existing agreement with STELLANTIS be terminated, a cash price be negotiated, and all existing debt be paid off. Existing shareholders will then be granted the option to buy shares in the buyer entity if it goes public in the future. (See FCAU stock analysis on TipRanks)

Kepler Capital analyst Michael Raab reiterated his Buy rating on FCAU three weeks ago and raised his price target to $24.62. This implies upside potential of around 36%.

Raab adjusted his estimates to be in line with his expectations for demand and production in the European auto sector. He believes that industry values looking at 2021 are well balanced, but it is still too early to make any projections for 2022.

Overall, consensus among analysts is a Moderate Buy based on 5 Buys and 2 Holds. The average price target of $17.30 suggests downside potential of around 5% over the next 12 months.

FCAU shares have gained around 23% in value since the beginning of the year.