Skip to main content
Sister Publication Links
  • Automotive News
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
Subscribe
  • Subscribe
  • login
  • HOME
  • News
    • News by Brand
    • Auto Shows
    • Canadians Abroad
    • Photo Galleries
    • Automakers
    • Suppliers
    • Retail
    • Dealer Best Practices
    • Government Relations
    • Trade and Tariffs
    • Technology
    • Labour
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ferrari
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Fiat Chrysler
      • Jeep
      • Fiat
      • Lancia
      • Maserati
      • Ram
    • Subaru
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
    • Volvo
    • VinFast
    • Toronto Auto Show
  • Opinion
    • Blogs
  • Video
  • Podcasts
  • EVENTS & AWARDS
    • 2022 Auto News Canada All-Stars
    • 2022 Canadians To Watch
    • 2022 Diversity Champions
    • Best Dealerships To Work For
    • Canada Congress
    • Retail Forum: Dealer Discussions
    • Leading Women Roundtables
    • Embracing Diversity Roundtable
    • EVs Decoded
  • Jobs & Classifieds
  • +MORE
    • IN THE DRIVER'S SEAT
    • NEWSLETTERS
    • SUBSCRIBE
    • CLASSIFIEDS
    • PEOPLE ON THE MOVE
    • COMPANIES ON THE MOVE
    • WEBINARS
    • ADVERTISE WITH US
    • CONTACT US
    • DIGITAL EDITION
    • PUBLISHING PARTNERS
MENU
Breadcrumb
  1. Home
  2. Automakers
January 04, 2021 05:05 AM

Fiat Chrysler-PSA merger nears finish line after shareholder approvals

Reuters
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    FCA PSA 2 rtrs web.jpg

    PSA CEO Carlos Tavares: "We are ready for this merger."

    Fiat Chrysler Automobiles and PSA Group shareholders signed off on a combination that’s endured two years of extraordinary drama, marked by on-again off-again talks, the transformation of their industry and a global pandemic.

    At separate meetings Monday, investors in both companies approved the merger to form Stellantis, the world’s fourth-largest automaker. The hurdles the two overcame to get to this point were plentiful and prodigious, with FCA even managing to patch things up after a short-lived attempt to join forces with PSA’s archrival Renault.

    The companies said the merger will be completed on Saturday, Jan. 16, and Stellantis stock will begin to trade on Monday, Jan. 18.

    Fiat Chrysler and PSA executives reckon they’ll boost returns with scale more closely resembling Volkswagen Group and Toyota Motor Corp., and have greater resources to compete with electric-car upstarts and tech-industry interlopers. But plenty of challenges await once the deal is done. Stellantis will be an amalgam of model lines with enviable positions in certain segments, but neither company has much of a foothold in the luxury-car business or China’s vast auto market.

    “Stellantis will be a sort of conglomerate of brands, some great and some not so good and most very regional,” said Jefferies analyst Philippe Houchois. “The merger will be a good opportunity for a reset.”

    STRENGTHS, WEAKNESSES

    The combined company will boast an impressive presence in North America’s lucrative truck and SUV segments, thanks to Fiat Chrysler’s Ram and Jeep divisions. PSA’s revitalized Peugeot and Citroen brands have excelled in Europe and are the envy of its turnaround-minded French foe, Renault.

    But both also have their weaknesses. The merger of Fiat with Chrysler did little to improve the fortunes of the Alfa Romeo and Maserati luxury lines, while PSA’s purchase of Opel only made the company more reliant on Europe’s crowded and shrinking market.

    Shares of Peugeot and Fiat Chrysler advanced as much as 4.2 per cent and 3.6 per cent respectively, in Paris and Milan trading, giving the companies a combined market value of about 44 billion euros (US$54 billion).

    The job of shaking up Stellantis’s portfolio will fall to PSA CEO Carlos Tavares, an ultra-competitive amateur rally driver who calls himself a “performance psychopath.” He takes a Darwinian view on the industry, arguing that only the strong carmakers will survive the pivot to electric drivetrains and pursuit of autonomous driving.

    “We are ready for this merger,” Tavares told PSA shareholders, adding that the companies are also prepared to announce a date for completion of the deal.

    GOVERNANCE ISSUES

    Tavares “has a strong track record in M&A and operational restructuring,” Institutional Shareholder Services analysts said in a report last month. While the proxy adviser recommended investors vote in favor of the merger based on its strong strategic and financial rationale, it did raise concerns about Stellantis’s governance.

    ISS took issue with a loyalty voting structure that will give greater sway to investors who hold shares at least three years, a binding-nomination process in which only the board will be able to nominate new additions, and a move away from annual director re-elections.

    Still, those qualms are outweighed by Fiat Chrysler shareholders being paid a pre-merger dividend of 2.9 billion euros (US$3.5 billion). The boards of both companies also are considering a potential distribution of 500 million euros (US$613 million) to each company before they close the deal, or 1 billion euros afterward to shareholders of the combined entity.

    The Agnelli family that controls Fiat Chrysler, led by Chairman John Elkann, agreed in September to shave 2.6 billion euros off the initial dividend the carmaker’s shareholders will receive to give Tavares more cash to work with when he takes the helm of Stellantis.

    EXTRACTING SAVINGS

    At the same time, Fiat Chrysler and PSA raised their estimate for the annual synergies Stellantis will achieve to 5 billion euros (US$6.1 billion), putting more pressure on Tavares to squeeze out efficiencies. The companies had previously said they would be able to extract 3.7 billion euros in yearly savings without closing any plants.

    The pandemic may have changed that calculus, though cuts will be hard to come by. Tavares will have to navigate the political crosscurrents in France, Italy and the U.S., where the automakers have deep national roots. He has tackled tough jobs before, leading the French automaker back from the brink after taking over as CEO in 2014 and reviving Opel after acquiring it from General Motors in 2017.

    As with other executives across the industry, Tavares and Elkann are responding to growing pressure to pool resources plugged into product development, manufacturing and purchasing to free up money for big bets on electric cars and self-driving systems.

    But being bigger isn’t necessarily reaping rewards. Tesla Inc. is now far more richly valued than VW, which is staging the biggest effort among the incumbents to electrify its vast fleet. GM has retrenched from many markets to focus on North America and China, while Renault and its alliance partner Nissan Motor Co. are restructuring after racking up huge losses.

    “The auto industry has been chasing size and consolidation for years, but it’s been slower in coming than many would like to see,” Houchois said. “The question is whether GM, Toyota and Renault-Nissan have provided evidence that there may be limits to this strategy.”

    RECOMMENDED FOR YOU
    Ford expects to lose US$3 billion on EVs this year
    Recommended for You
    MACHE-MAIN_0_0.jpg
    Ford expects to lose US$3 billion on EVs this year
    Remote Work
    How to find the perfect work balance in auto
    The-History-Of-The-International-Harvester-Scout-Scout-II.jpg
    VW board said to discuss two new N.A. plants for Scout, batteries
    DSMA CEO on current mergers & acquisitions outlook
    Sponsored Content: DSMA CEO on current mergers & acquisitions outlook
    Digital Edition
    March 2023 Cover
    View latest issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    THE BIG STORY: Catch up on the top news of the week with our video round up. We'll email you a summary of the video and a link to watch.
    Get Free Newsletters

    Sign up today for our Weekly Newsletter, Daily Newsletter and Breaking News Alerts. We'll deliver the news you need to know straight to your inbox.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Subscribe Now

    An Automotive News Canada subscription includes 12 monthly issues – delivered in print to your doorstep, and digitally to your inbox – plus unlimited, 24/7 access to our website.

    Subscribe Now
    Connect With Us
    • Facebook
    • Twitter
    • Instagram

    Our Mission

    The Automotive News Canada mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in Canada.

    Contact Us

    1155 Gratiot Ave
    Detroit MI 48207

    1-877-812-1257

    Email Us

    ISSN 2475-5001 (print)
    ISSN 2475-501X (online)

    Resources
    • About us
    • Contact Us
    • Digital Edition Archive
    • Advertise with Us
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Canada
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • News
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ferrari
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Fiat Chrysler
          • Jeep
          • Fiat
          • Lancia
          • Maserati
          • Ram
        • Subaru
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
        • Volvo
        • VinFast
      • Auto Shows
        • Toronto Auto Show
      • Canadians Abroad
      • Photo Galleries
      • Automakers
      • Suppliers
      • Retail
      • Dealer Best Practices
      • Government Relations
      • Trade and Tariffs
      • Technology
      • Labour
    • Opinion
      • Blogs
    • Video
    • Podcasts
    • EVENTS & AWARDS
      • 2022 Auto News Canada All-Stars
      • 2022 Canadians To Watch
      • 2022 Diversity Champions
      • Best Dealerships To Work For
      • Canada Congress
      • Retail Forum: Dealer Discussions
      • Leading Women Roundtables
      • Embracing Diversity Roundtable
      • EVs Decoded
    • Jobs & Classifieds
    • +MORE
      • IN THE DRIVER'S SEAT
      • NEWSLETTERS
      • SUBSCRIBE
      • CLASSIFIEDS
      • PEOPLE ON THE MOVE
      • COMPANIES ON THE MOVE
      • WEBINARS
      • ADVERTISE WITH US
      • CONTACT US
      • DIGITAL EDITION
      • PUBLISHING PARTNERS