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Auto stocks up on deal talk
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January 5, 1999: 7:25 a.m. ET
Major European auto deal 'within 90 days' says DaimlerChrysler boss
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LONDON (CNNfn) - The race is on in the European auto sector to be the first to announce a big deal for 1999.
European auto stocks caught fire in early trade Monday, as comments at the Detroit motor show ignited speculation of another major deal in the auto industry.
Robert Eaton, joint chairman of DaimlerChrysler, told reporters in Detroit a significant deal between two European manufacturers would be announced in the next few months.
"Eaton wouldn't have said that if he wasn't sure something would happen," said a London-based analyst who didn't wish to be named.
"This business is becoming more and more global," said François Colli, auto analyst at Paribas, " and companies that are not among the five major players could be in trouble over the long term. This will force them into agreements with other groups."
Traders drooled over the prospects for links between Volvo and Fiat, or Ford (F) and any one of several European groups. A BMW (FBMW) spokesman flatly denied the group was in merger talks with Ford Tuesday, although that didn't stop the group's shares from soaring 5 percent.
Speculation has also involved several of the major Japanese auto groups, with Nissan the prime candidate. DaimlerChrysler has been discussing the acquisition of the Japanese group's diesel truck business for several months, and recent reports suggested these talks could turn into a full-blown merger. France's Renault (PRNO) is also said to be giving the once-over to the Japanese group.
"Ford's name always crops up because they've made no secret of the fact they have a lot of money and they want to spend it in Europe or Asia," said the analyst.
Of all the rumored deals, analysts said a Volvo/Fiat deal would make the most sense, and would face less political opposition than some possible tie-ups.
Fiat shares are up 3 percent at 3.23 euros after being suspended limit-up following a 10 percent jump earlier. Volvo shares shot up 6 percent at 212 Swedish crowns.
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DaimlerChrysler
Volvo
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