According to a couple of sources that have knowledge of the proceeds, Morgan Stanley restricted coverage of General Motors and Fiat Chrysler Automobiles NV, the first and third largest US automakers.
The decision to limit the coverage of analyst Adam Jonas comes as GM, a longstanding advisory client, said the automotive rival approached the company to discuss a merger – and the decision translates into Jonas stopping delivery of recommendations or price targets on the companies. The persons, who opted to remain anonymous because they are not allowed to talk in public about the bank’s research policy, said Morgan Stanley imposed the restrictions when it became public knowledge that FCA chief executive officer Sergio Marchionne approached GM CEO Mary Barra about negotiating a deal. The bank would most likely end up working for GM if Marchionne succeeds in pressing for a deal, even as GM has opted to decline any agreement so far, hinted the sources.
Fiat Chrysler, as its CEO is pushing for industry consolidation, has recently hired an investment bank to try and convince investors that a GM – FCA merger would be in their best interest, according to new reports on the matter. The sources at Morgan Stanley said the bank was not asked by GM to talk to investors on the matter because the latter doesn’t feel pressed by shareholders to consider the merger opportunity. Morgan Stanley has a long standing relationship with GM, having worked with the automaker back in 2009 during its restructuring, for the 2010 initial public offering and when activist investor Harry Wilson and hedge funds pressured Barra to bring a stock buyback strategy this year.