Citigroup Sees Pros To A Fiat Chrysler/General Motors Merger

Fiat Chrysler Automobiles NV FCAU CEO Sergio Marchionne reportedly began reaching out to major hedge funds, and others, to push General Motors Company GM into a merger with Fiat, according to The Wall Street Journal.

Citigroup analyst Itay Michaeli believes that General Motors may be ahead of mass market original equipment manufacturing (OEM). He adds that there is benefits from both accepting the offer and declining it; By resisting the offer, GM investors will gain more confidence in 2016 and long-term strategy. By accepting the offer, the M&A deal will win “strong GM shareholder support,” thereby increasing the price of the stock.

See Also: Fiat Chrysler Reportedly Recruiting Partners To Pressure GM Into Merger

Citigroup rates General Motors as a Buy alongside a $50 price target.

Itay mentioned that General Motors is Citigroup’s only recommended U.S. OEM stock. He concludes that General Motors is expected to trade at a premium compared to Ford.

Shares of General Motors traded recently at $35.17, up 0.53 percent. Shares are down more than 6 percent in the past three months.