VW Stays on Restructuring Path -- WSJ

Auto maker's CEO dismisses talk of possible Fiat Chrysler merger as 'speculation'

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 8, 2017).

WOLFSBURG, Germany -- Volkswagen AG is actively working on deals for its noncore assets as well as acquisitions, but discussions of a possible merger with Fiat Chrysler Automotive NV was "speculation," Chief Executive Matthias Müller said in an interview.

Speaking to The Wall Street Journal at the car maker's headquarters late Wednesday, Mr. Müller said the company is open to talks and a new team is working to sell a businesses no longer considered critical. These noncore assets account for as much as 20% of the company's current annual revenue, he added.

Mr. Müller declined to comment directly on talks the company is believed to be holding with Fiat Chrysler about developing light utility vehicles. He did say the company is now routinely engaged in such exploratory talks with many manufacturers, but it isn't likely that Volkswagen is going to get involved soon in a merger of mass volume car makers, as Fiat Chrysler's Chief Executive Sergio Marchionne has been preaching for the past two years.

"We're a big company and don't have any interest in getting any more bloated. There has been a lot of speculation about FCA, which we've noted, but it is just speculation and nothing more," Mr. Müller said.

"If we say we're speaking to Fiat, then we're also speaking to five or six other companies in order to see how we can optimize our business," he said. "The difference with the past is that Volkswagen is now willing to get involved in such exploratory talks," he added.

Over the summer, a potential sale of Volkswagen motorcycle brand Ducati sparked interest among a number of suitors, including Harley-Davidson Inc. Talks for the brand stalled after labor representatives opposed the sale, raising speculation that the car maker's entire divestment strategy would be put on hold.

Mr. Müller said he did not believe that labor representatives were blocking the Ducati discussions, but, as Volkswagen's unique governance structure involves both the state and IG Metall trade union in decisions, the talks were a larger strategic debate that takes time.

"The list [of asset disposals] has not been put away on the shelf. But we're not going to let anyone tell us which decision to make," Mr. Müller said.

Some investors and analysts have been pressing Volkswagen to consider even more far-reaching changes than selling off fringe businesses such as Ducati. Encouraged by Fiat Chrysler's successful spinoff of Ferrari NV, some investors are pushing Mr. Müller to spin off units such as Porsche Automobil Holding SE, Audi AG and Volkswagen Trucks to boost the share price.

"Of course, we discuss these things," Mr. Müller acknowledged, but declined to elaborate.

"We hear the speculation in the public discussion, but we aren't allowing it to distract us."

Write to William Boston at william.boston@wsj.com

(END) Dow Jones Newswires

September 08, 2017 02:47 ET (06:47 GMT)