Fiat Chrysler and Peugeot signed a win win merger deal to be the world's fourth-largest automaker company.

Fiat Chrysler, Peugeot sign 50 - 50 merger deal

Alfonsus Adi Putra
Business & Industry
Automotive & Equipment
Dec 19, 2019
2180
To tackle emission issues and embrace the new driving tech, the Italian – American automobile alliance, Fiat Chrysler Automobiles (FCA), and French automaker, PSA Peugeot, signed a 50 – 50 merger deal on Wednesday, creating the world’s fourth-largest automotive company.

The merged company will be headed by FCA’s chairman, John Elkann, and PSA’s CEO, Carlo Tavares, and legally based in the Netherlands, and traded in Paris, Milan and New York.

Despite being 50 – 50 merger deal, PSA is seen to have the upper hand in the management, with Tavares on the spearhead and one extra seat for PSA in the merged company. While the names for the new company haven’t been unveiled yet, Tavares and Fiat Chrysler’s CEO, Mike Manley, said that it was not a sensitive subject.

Manley’s position, as the CEO of FCA, remains unknown in the merged company. He might stay on, but the details are not yet unveiled.

The deal, unveiled in October, will take approximately 12 – 15 months to close. It will result in a group with £170 billion in revenues and a great productivity of 8.7 million cars in a year. With such productivity, the merged company will be trailing behind Toyota, Volkswagen, and Nissan – Renault alliance, exactly the fourth-largest in the world.

Furthermore, £3.7 billion of annual savings will be created for investments in new sustainable mobility to answer the strict European emission regulation. This technology – described by Tavares as a transition to a cleaner, safer, and more sustainable mobility - covers autonomous driving and electrified vehicles.

FCA itself had been looking all around for a new partner to share the cost to develop electrification and autonomous driving after a debacle with also a French automaker, Renault, amid French government’s concern for its alliance with Nissan.

But now, Tavares claimed that the French government had given its full consent to the merger deal.

The merged company aims to start strong in Europe, where Peugeot already established its fame as the second-largest automaker, while Fiat is looking to ascertain its dominance in North and Latin America.

But, both aim to tread their foot on the Chinese market where it previously flopped. Tavares claimed that the investment is supported by Dongfeng, a Chinese state-owned automaker, which also invested in the merger deal. But with the sale of 30.7 million of its shares, Dongfeng’s stake at the merged company will be diluted from 6.2 percent to 4.5 percent.

The merged company will pay a hefty €5.5 billion premium to its shareholders, concern about whether the merged company will have to bear a heavy debt. Meanwhile, PSA is paying 32 percent premium to acquire FCA.

Source: https://bit.ly/2Q0J2le

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