Great Wall Motors Wants Fiat Chrysler
The Chinese automaker says that it has “always had the interest and intention to acquire” Fiat Chrysler (FCA).
Editor’s Remarks: FCA is the world’s seventh largest auto maker, targeting sales of 7m vehicles a year, and it has said that it has not been approached by Great Wall Motor (GWM). GWM is one of China’s largest privately owned automakers, selling over 1m Sports Utility Vehicles (SUV) and trucks in China, and a tie-up with FCA would enable it to boost its high-end SUV product range. But a simple takeover could be too big for GWM, whose market cap is $18.1bn compared with FCA’s $20bn, unless it can get significant outside funding. Apart from the Fiat and Chrysler brands, FCA also owns Jeep, Dodge and Maserati and maybe GWM’s real target is Jeep, which sold 1.4m units in 2016, and would fit with the Chinese company’s SUV offering. FCA has previously approached General Motors and Volkswagen about a merger or takeover, and it should be no surprise that GWM has global aspirations after competitor Geely Motor’s success with its 2010 Volvo acquisition.
Hyundai Motor Governance Targeted
The new head of South Korea’s Fair Trade Commission is talking to Hyundai Motor about changing its complex ownership structure.
Editor’s Remarks: President Moon Jae-in has focused on the disproportionate influence of South Korea’s “chaebols” (conglomerates) in the economy since taking power in April, and his anti-trust chief Kim Sang-jo is getting down to work. Hyundai Motor’s founding Chung family only own a 7.5% direct stake in the auto manufacturer but control it through a complex web of cross-holdings. Kim has labelled this a “big governance risk” and suggested that the Chung family “shouldn’t waste more time before dissolving cross-shareholdings.” This move comes hot on the heels of the sentencing of Samsung Group heir and vice-chair Lee-Jae Yong to 12 years in jail for his role in bribing ex-President Park. Both the public and the stock market seem in favour of chaebol reform – shares in Hyundai Motor and other Hyundai group companies rose after Kim’s comments.
Maersk Sells Oil Unit to Total
The $7.5bn deal will allow Maersk to concentrate on its core container shipping, ports and logistics businesses.
Editor’s Remarks: Maersk Oil’s assets are mainly concentrated in the North Sea, with reserves of around 1bn barrels of oil, and the share deal, which includes $2.5bn of existing debt, will give Maersk Group a 3.75% stake in the French oil company. Maersk has said that it will return to investors a “material portion” of the Total shares it receives through a dividend, share buyback or distribution of the shares themselves. Maersk is the world’s largest container shipper and has been restructuring to take advantage of a sector that is consolidating quickly and where freight rates and profitability are showing improvements. And there could be more divestments to come – Maersk also owns oil drilling, tanker and supply services businesses and sales of these could net a similar amount to shareholders.
China Outbound Investment Crack-Down
The State Council has issued new regulations on overseas deals by Chinese companies that aim to restrict “irrational investment.”
Editor’s Remarks: The new guidelines will target outbound investment in property, hotels, entertainment and sports clubs in a move that underlines the central government’s efforts to reign in highly leveraged overseas acquisitions by private companies. However, at the same time, the State Council is encouraging investment in infrastructure projects linked to President Xi Jinping’s “One Belt, One Road” initiative and will also support investments in the high-tech, energy and agricultural sectors. After a splurge of deals in 2015 and 2016, government efforts to restrict “irrational” acquisitions have already impacted outbound investment, which totalled $57bn in the year to July, compared with $103bn during the same period in 2016. President Xi is upping his control of the economy in the lead into the upcoming 19th Communist Party Congress.
Beware of Killer Robots say Tech Experts
A group of 116 bosses of robotics companies have written an open letter to the UN warning of the dangers of lethal autonomous weapons.
Editor’s Remarks: The UN was due to begin discussions on formulating an outright ban on the development of autonomous weapons as part of its Convention on Conventional Weapons (CCW), but these talks have now been postponed until November. Signatories to the open letter, including Elon Musk and Mustafa Suleyman, head of AI at Google’s Deepmind, have warned that “once this Pandora’s box is opened, it will be hard to close” and urged the UN to act on a possible “third revolution in warfare.” In December 2016, the UN voted to begin formal talks on autonomous arms but so far only 19 out of 123 member states have called for an outright ban, and the open letter marks the first time that the world’s leading experts and developers of robotics and AI have come together to highlight the issue.