Fiat Chrysler Reportedly Recruiting Partners To Pressure GM Into Merger

Fiat Chrysler Automobiles NV (NYSE: FCAU) is recruiting activist hedge funds to take a stake in General Motors Company (NYSE: GM) and prod GM into a merger, according to a Wall Street Journalreport.

Fiat's CEO, Sergio Marchionne, is allegedly behind the strategy, which has been unsuccessful thus far.

Activist investors had success in prompting GM to return money to shareholders in the form of $5 billion in share buybacks. Marchionne hopes that this indicates that the GM board would be receptive to pressure on other management areas. For Fiat Chrysler, the merger could help the automaker reduce costs and improve North American margins, which are currently at 3.7 percent, half of GM's.

Related Link: Here's What Elon Musk Said About Fiat Chrysler

Marchionne is attempting to get out ahead of consolidation he sees coming in the industry. In the future, Marchionne expects that GM, Toyota and Volkswagen will be the mega-manufacturers.

However, inside the GM boardroom, CEO Mary Barra has repeatedly noted that the company would not be distracted from continuing an internal consolidation that has reduced costs and improved ROI. Barra will continue to make this case during GM's annual shareholder meeting, which begins on Tuesday.

Fiat Chrysler stock has gained nearly 35 percent year-to-date, compared with flat performance in GM stock. However, comparing market caps, GM is more than 2.5 times the size of Fiat at $56.44 billion compared with $20.11 billion.