Fiat Chrysler and Peugeot owner PSA Group confirm merger
Peugeot owner PSA Group and Fiat Chrysler have confirmed plans for a merger that would create the world's fourth-largest car maker.
Fiat Chrysler Automobiles N.V.
$24.74
10:59 26/04/24
The companies said in a joint statement on Thursday that they will finalise the terms of the deal "in the coming weeks".
The shareholders of each group would own 50% of the equity of the newly-combined company and would therefore share equally in the benefits. The transaction would be affected by way of a merger under a Dutch parent company and the governance structure of the new entity would be balanced between the contributing shareholders, with the majority of the directors being independent.
"In a rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility, the combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency," they said.
The proposed combination would create the fourth-largest global original equipment manufacturer in terms of unit sales, with combined revenues of nearly €170bn and recurring operating profit of more than €11bn.
The value accretion resulting from the transaction is estimated at around €3.7bn in annual run-rate synergies, derived principally from a more efficient allocation of resources for large-scale investments in vehicle platforms, powertrain and technology and from the enhanced purchasing capability inherent in the combined group’s new scale. The companies said these synergy estimates are not based on any plant closures.
It is expected that 80% of the synergies would be achieved after four years.
At 0930 GMT, Fiat Chrysler shares were up 9% at €14.02 while PSA shares were down 10% at €23.43.
CMC Markets analyst Michael Hewson said: "The reaction in the respective companies share price would suggest that Fiat have got the better deal here, with Peugeot’s share price falling sharply, while Fiat Chrysler has risen further.
"It’s not hard to understand this reaction when you consider the job done by Peugeot management over the last five years, while Fiat Chrysler management have overseen a tired product line and little in the way of innovation, in response to the challenges that are facing the sector as a whole, which include, but aren’t confined to, electric and driverless cars."