FCAU - Fiat Chrysler Automobiles

[vinod1]

You guys are coming up with a value of about $35 to $40 in 5 years or about $25 now.

But, as per the new 4 year plan earnings are supposed to be €5.9 to €7.3 per share in 2022.

Even if (a pretty big IF) Fiat gets to only €5.0 ($6) and at 5 PE it would be worth $30 within 2-3 years. And arguable more.

So how is the merger more attractive than being standalone, given all the additional risks that come along?

Vinod

[rolling]

You guys are coming up with a value of about $35 to $40 in 5 years or about $25 now.

But, as per the new 4 year plan earnings are supposed to be €5.9 to €7.3 per share in 2022.

Even if (a pretty big IF) Fiat gets to only €5.0 ($6) and at 5 PE it would be worth $30 within 2-3 years. And arguable more.

So how is the merger more attractive than being standalone, given all the additional risks that come along?

Vinod

What story makes most sense?
1- fcau getting those earnings as a standalone
2- synergies and scale from merger

I think the 2nd one especially because:
A) option 2 does not exclude option 1 possibility (those earnings can go right and you still get 50% of those plus the extraordinary dividends)
B) estimated synergies do not include factory closings. If a recession comes, those "unplanned" synergies will materialize even if those 3.7B turn out to be lower. If a recession comes, least efficient factories will probably close.

So my take is: significant de-risking and higher (real) upside.

[RadMan24]

I mean, operationally, you will have a guy who turned GM Europe from a loss maker of 20 years to $1 billion EBIT in 9 months.

Carlos Tavares is the best operator in the business, now at the helm (in 12 months or so). It's worth to see how this plays out in my opinion.