By on October 31, 2019

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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27 Comments on “Fiat Chrysler and PSA Confirm Merger Deal...”


  • avatar
    SCE to AUX

    “PSA can take advantage of Fiat Chrysler’s profitable U.S. brands and direct access to the North American market”

    What pixie dust will make that succeed? PSA’s brands died off in the US years ago. Other than a few keyboard fans, they won’t make it in the US – not to mention the enormous effort required to Federalize them.

    And does Europe really want Grand Cherokees and Challengers?

    • 0 avatar
      here4aSammich

      From what I have read, PSA was already federalizing their product in preparation for returning to the US. The current Peugeot lineup of cars and SUVs could make a nice Chrysler lineup that way. I can’t speak for reliability, but the C3 Aircross I had this spring in Switzerland was far from a penalty box.

  • avatar
    R Henry

    ““This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity,”

    How many times have we heard this when corporate bigs announce their mergers and acquisitions?

    Dieter Zetsche of MB, that whole Time/Warner AOL thing, Verizon/Yahoo, HP/Compaq…the list is long. Trouble is, these tie ups are real crapshoots.

    • 0 avatar

      Why? Compaq still makes laptops, they just called HP, and is still leader in world laptop market.

      • 0 avatar
        28-Cars-Later

        The HP-Comqaq thing was an absolute disaster, Carly Fiorina should have been immediately exiled to the Isle of Elba for even proposing the deal. Poster child for the price of dieversity.

        “Worst [tech] merger ever”

        “While the Itanium partnership with Intel surely started HP down the road to hell, it was accelerated in 2001 when HP, under the guidance of CEO Carly Fiorina decided to merge with Compaq in a $25 billion dollar deal.”

        “Many large shareholders opposed the merger, including Walter Hewlett, the company’s outspoken director and son of the company’s co-founder, who engaged in a proxy battle in an attempt to prevent it. The prime objection was that Compaq had many overlapping product lines and would get the company involved in the low-margin PC business that its main competitor, IBM, was already in the process of exiting.”

        “Under Carly Fiorina’s reign, the merged “New” HP lost half of its market value and the company incurred heavy job losses. Fiorina stepped down in 2005.”

        https://www.zdnet.com/article/worst-tech-mergers-and-acquisitions-hp-and-compaq/

      • 0 avatar
        R Henry

        The point is that sometimes mergers work (Compaq/HP) and sometimes the don’t (AOL/Time Warner). Regardless, the suits ALWAYS utter the same inane blather about “realizing efficiency” when the deals are closed.

  • avatar
    Steve Lynch

    So long-time Chrysler employees have seen these owners/partners:

    Chrysler
    AMC/Renault
    DaimlerChrysler
    Cerberus
    Fiat
    Peugeot

    Kudos to a TTAC poster for this gem:

    Merger: Fiat, Nissan, Chrysler, Renault, And Peugeot =

    FNCRAP !!!

    • 0 avatar
      CKNSLS Sierra SLT

      You can’t count Cerberus-they had no idea what they were doing from the very beginning.

      • 0 avatar
        MoDo

        They gave it a solid shot, poached top Toyota execs to help run it, put more cash into the cars and then BOOM – the 2008 meltdown happened. Had they succeeded they would be in very good shape today. While Fiat did a good job, they funneled the profits from Ram, Jeep and Dodge back into Alfa and Maserati which are both failures which is why you’re seeing PSA take over.

      • 0 avatar
        stuckonthetrain

        Cerberus mainly wanted the financing arm (again, this is pre-crash). For the most part, its interest in the OEM was only in support of that longer-term end goal.

  • avatar
    Tstag

    Peugeot have some nice looking cars and SUVs these days. I wouldn’t bet against them having limited success in the USA if they send over the right product mix.

    In Europe it will be interesting to see how the combined group exploit the Vauxhall and Lancia brands. Does Lancia get dropped in the bin now? Or does Opel become Lancia in Italy?

  • avatar
    thornmark

    the Agnelli family looks like the real – only – winners

  • avatar
    Pig_Iron

    A ship can have only one skipper.

  • avatar
    SCE to AUX

    GM effectively paid PSA to take Opel off their hands, once you factor in the pension fund liability. I can’t imagine FCA/PSA is better off with Opel in the mix.

    Two drowning swimmers do not combine to make Michael Phelps.

    • 0 avatar
      Manic

      There’s room for Opel in Europe it seems:”PSA aims to be a major player in electrified mobility with all new models coming in a hybrid plug-in or an all-electric version: DS 3 CROSSBACK E-TENSE, Peugeot e-208 and e-2008 and Opel Corsa-e in 100% electric version, and DS 7 CROSSBACK E-TENSE 4X4, Peugeot 3008 HYbrid & HYbrid4, Peugeot 508 & 508 SW HYbrid, Opel Grandland X Hybrid4 and Citroën C5 Aircross SUV Hybrid in hybrid plug-in version.

      Groupe PSA is also preparing a full electrified LCV range by 2025, starting with Citroën Berlingo and Peugeot Partner, already available in an electric version. The new electrified generation of these vehicles for Peugeot, Citroën and Opel/Vauxhall will be available by 2021. The group presented last April a preview of the electrified versions of Peugeot Boxer and Citroën Jumper [=RAM ProMaster] at the Birmingham Commercial Vehicle Show. It also announced an electrified version for 2020 in the medium van segment. 14 new electrified vehicles will be launched in just two years.” -https://media.groupe-psa.com/en/worldwide-sales-19m-units-first-half-2019

  • avatar
    mtunofun

    Yay! Can’t wait to buy my Peugeot!

  • avatar
    Jeff S

    I can wait a long long time possibly forever. Rather have a Chinese made vehicle than a French one.

  • avatar

    So, as expected Jeep officially killed FIAT too. If anyone have illusions that it is the marriage of equals it is time to open eye and face reality: PSA bought FCA. The irony is that the only valuable part for PSA is Jeep and RAM. The rest – it can shut down. I do not think it has resources to develop RWD platform for overpriced exotics like Maser or AR. FIAT is dead in my book – in best case scenario they will produce rebadged Peugeots. As if anyone cares. So FIAT will be Eaglefied.

    • 0 avatar
      volks92

      I think you’re spot-on. FCA’s European brand portfolio is sinking, they need to make a decision to continue investing in a diminishing business or partner with someone to cut losses; now we know which one is it.

      • 0 avatar
        MoDo

        I think after an indepth analysis by PSA you’ll see Maserati for sale first and then Alfa second. Both are money sucking failures and will work well within Geely who will buy them. NA provides something insane like 97% of profits for FCA so don’t count Chrysler or Dodge out. Nobody wants a Peugeot over here.

        • 0 avatar
          dal20402

          I suspect some Peugeots may be a basis for better Jeep CUVs than the existing Fiat platform. The current Compass and Cherokee have awful packaging and subpar reliability. At least the packaging is better with the Euro-market Pugs.

          • 0 avatar
            ajla

            The packaging is bad on the Jeeps mostly because the brand wants to have a best-in-class off-road version of everything they sell.

            I have a feeling the FCA holdouts will die on that hill so any well-packed CUVs will probably end up in another brand.

  • avatar
    Steve203

    This announcement really couldn’t come at a worse time, just as FCA is negotiating with the UAW. First thing the union is going to wonder about it how it impacts their rank and file.

    The article says Mike Manley is gushing praise. I bet his personal printer is gushing resumes, as, I don’t see him mentioned in a top job, only Tavares and Elkann.

    This deal still looks synergy free to me. In Europe, the Peugeot SUVs handily outsell Jeeps. Nothing else FCA-NA makes will sell in Europe, because everything is so big. Marchionne tried the Chrysler 300, badged as a Lancia and the Dodge Journey badged as a Fiat. Both failed.

  • avatar
    Jeff S

    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.

    • 0 avatar
      ajla

      I would also be extremely surprised if there is ever a “new” Charger or Challenger. However, I think those cars were on a one-way ticket even without a merger.

      They’ll just stay the same as they are today until they no longer make PSFCA money (whether from new regulations or falling demand) and then get the permanent axe.

    • 0 avatar
      Lou_BC

      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.

  • avatar
    Jeff S

    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.

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