Strategist Sees 'Defensive' Posture At Fiat Chrysler

Fiat Chrysler Automobiles NV (NYSE: FCAU) wants to cut debt and gain market share, a strategist told Benzinga Wednesday.

The London-based company plans to spin off a stake in its Ferrari unit later this year and had hoped to get an acquisition offer from General Motors Company (NYSE: GM).

"If you look at their balance sheet, it makes sense for them to deleverage themselves," Recon Capital Chief Investment Officer Kevin Kelly told Benzinga.

At GM's annual shareholders meeting Tuesday, Chief Executive Mary T. Barra reportedly rejected the notion of a hook up.

Fiat Chrysler "is trying to make a lot of moves," Kelly said. "We see it as a way to gain market share whether it's through a strategic partnership or an IPO for Ferrari."

Related Link: UBS: Ford Ready To Break Out

Kelly called Fiat Chrysler's interest in a merger "defensive."

The company has reportedly contacted other automakers about a merger, including its Chinese joint venture partner Guangzhou Automobile Industry Group Co.
Fiat Chrysler in October unveiled its intention to spin off a 10 percent stake in its luxury unit Ferrari as part of a plan to boost capital by $5 billion.

The spin off won't hit the market until October 12 at the earliest because of tax rules, Fiat-Chrysler Chief Executive Sergio Marchionne told The Wall Street Journal last week.

The offering had previously been expected as early as July, and Marchionne has publicly discussed increasing the stake to be spun out above 10 percent.