Fiat Chrysler and PSA Confirm Merger Deal

Matt Posky
by Matt Posky
fiat chrysler and psa confirm merger deal

Fiat Chrysler Automobiles and Groupe PSA both confirmed their intention to merge on Thursday, verifying reports that the pair were in the final stages of approving the deal. The arrangement will be a 50-50 share swap, with the new company’s shares listed on the New York, Paris and Milan stock exchanges.

The duo hope to finalize a deal in the coming weeks to create a group with 8.7 million in annual vehicle sales. That would make it the fourth-largest automaker in the world — behind Volkswagen, Toyota and the Renault-Nissan-Mitsubishi alliance.

“There is still plenty of work to do before we reach a formal agreement, but what’s clear is that the opportunity that represents for both companies is very compelling,” FCA head Mike Manley told Reuters. It would appear the arrangement is getting plenty of support. French and Italian leadership have both endorsed the move, provided there are no significant job losses in either country.

France, which owns a 12-percent stake in PSA, was originally seen as a minor obstacle — as its foot-dragging is often cited as the core reason FCA did not merge with Renault (of which France owns a 15 percent chunk) earlier in the year. That didn’t happen this time, leaving us to look elsewhere for conflict.

As it turns out, there isn’t much. China’s Dongfeng Motor has a 12.2-percent equity stake and minority voting rights in PSA, potentially creating conflict with the United States (what with the trade war). But most think it’ll use the merger to sell its shares. Following the deal’s announcement, FCA shares rose as much as 11 percent to a one-year high of 14.25 euros. PSA shares fell as much as 14 percent to a two-week low of 22.33 euros.

As part of the deal, FCA plans on paying its shareholders a 5.5 billion-euro dividend and and some shares of its Comau robot-making unit. PSA plans on handing over its 46-percent stake in Faurecia to its investors.

Head office locations will exist in France, Italy and the U.S. — with the parent company HQ stationed in the Netherlands. The newly formed board will have 11 members — half nominated by FCA, half by Groupe PSA, with Carlos Tavares serving as the group’s CEO for five years and getting a seat of his own.

“This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity,” Tavares said in a statement. “I’m pleased with the work already done with Mike and will be very happy to work with him to build a great company together.”

“I’m delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination,” gushed Manley. “We have a long history of successful cooperation with Groupe PSA and I am convinced that together with our great people we can create a world class global mobility company.”

With FCA heavily dependent on older platforms, PSA could help it adhere to stringent emission rules around the globe. Fiat Chrysler is presumed to be on the hook for millions in European fines if it doesn’t start swapping over to hybrids and EVs. Meanwhile, PSA can take advantage of Fiat Chrysler’s profitable U.S. brands and direct access to the North American market. The merger is also believed to help the duo weather the storm of expensive investments into mobility and electrification (synergy!). But those are just the broad strokes — expect us to begin digging into how the union will change both businesses’ product portfolios in the coming days. For now, Jeep, Dodge, Ram, Chrysler, Fiat, Alfa Romeo, Maserati, Peugeot, Citroen, DS, Opel and Vauxhall have all been accounted for.

[Image: Daniel J. Macy/Shutterstock]

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  • Jeff S Jeff S on Oct 31, 2019

    I doubt PSA would develop new RWD platforms for the Charger and Challenger as well. PSA's main interest would be the NA market, Jeep, and Ram. Dodge and Chrysler will not survive especially if they do not get new platforms and I doubt putting another Dodge on a shared front wheel drive platform or rebadging a PSA product as a Dodge will be successful. I do understand sharing and consolidating manufacturing is a necessity in a global market but I cannot see Dodge or Chrysler products surviving and I fear that PSA might undo some of the success of Jeep and Ram. It is what it is. If someone wants a Hellcat Charger and Challenger they better buy soon because they will eventually go away between Government regulations and this merger. There is only so long in today's market that an old platform can survive.

    • See 1 previous
    • Lou_BC Lou_BC on Nov 01, 2019

      They could kill Dodge with minimal effects to overall sales. Just Hellcat pickups to replace the Challenger. Tub a shortbox Ram and put in a fully braced cage and you have your Hellcat Demon. Flare and slam a Ram and you have a Hellcat Redeye wide-body. Extended and crewcab variants become the Charger. Problem solved.

  • Jeff S Jeff S on Oct 31, 2019

    Agree it is a matter of how long the Charger and Challenger last. FCA has done a lot in extending the life of those products with Hellcat and other special editions. I doubt Dodge and Chrysler will survive as brands. At least FCA got the RAM truck and the Jeep brand right.

  • Wolfwagen I always thought the HRV and CHR looked similar and ugly and unuseful
  • DedBull How much of that debt is directly tied to their purchase of ADESA? While wholesale volumes are down, the dealer auction is still a backbone of the used automotive industry. I assume ADESA was a functional and profitable business before it's acquisition. Break it back off, with some amount of it's debt following, and start shrinking the retail side until it is stable.
  • Jon This does not seem like anything new for Oxford. In my one visit to England 10 years ago I received a random bill from the rental car agency for a ticket long after I had come home. I was driving in Oxford, made a wrong turn, and needed to turn around. The street ended at a cross street so the only way to do so was to cross over a "bus gate" which was just some lettering painted on the street. I think it was a weekend and there was no traffic, no busses around, etc. I drove over it made my u-turn and drove back down the road I was on. I did not continue on in a bus lane or cause harm or danger to anyone. One of their cameras caught my error and sent a hefty fine. After I received it I did some research and found many folks complaining of the same thing after visits to Oxford.
  • SCE to AUX Probably couldn't afford it - happens all the time.
  • MaintenanceCosts An ugly-a$s Challenger with poor equipment choices and an ugly Dealership Default color combination, not even a manual to redeem it, still no sale.