'I Do': Fiat Chrysler, PSA Sign Binding Merger Agreement

Steph Willems
by Steph Willems
8216 i do fiat chrysler psa sign binding merger agreement

Regulatory and shareholder approvals will take some time, but the pending merger between Fiat Chrysler and France’s PSA Group is now chiseled in stone. The two automakers signed a binding combination agreement on Wednesday, positioning their respective companies for a 50:50 tie-up and the creation of the world’s third-largest automaker (by revenue).

Going by sales would make it the fourth-largest.

The move comes after the French government, which owns 12 percent of PSA, gave the deal ther green light, with the Peugeot family offering its own thumbs-up.

Headquartered in The Netherlands, the combined entity — once fully meshed — will span the globe, drawing 46 percent of its revenue from Europe and 43 percent from North America. The companies are aiming for $4.1 billion in annual savings achieved through platform and technology sharing, with two vehicle platforms (small and compact/midsize) expected to account for two-thirds of its volume.

One-time costs associated with the merger total $3.1 billion.

Broken down, FCA and PSA see tech- and platform-related synergies as making up 40 percent of the combined entity’s cost savings, with another 40 percent derived from purchasing. Marketing, IT, and logistics will make up the remaining 20 percent.

Helming the whole operation will be PSA CEO Carlos Tavares, who’ll hold a seat on the 11-person board. Term length is five years. In the group chairman seat is FCA Chairman John Elkann. The agreement stipulates that no shareholder will be able to exercise more than 30 percent of the votes cast at the entity’s shareholder meetings.

“Carlos Tavares, Mike Manley and their executive teams have a strong track record in successfully turning around companies and combining OEMs with diverse cultures,” the automakers said in a joint statement. “This experience will support the speed of execution of the merger, underpinned by the companies’ strong recent performances and already robust balance sheets. The merged entity will maneuver with speed and efficiency in an automotive industry undergoing rapid and fundamental changes.”

Key to ensuring French support for the deal was the assurance that no assembly plants would be mothballed as a result of the merger; both companies anticipate positive cash flow starting in Year One.

In a letter to employees seen by Reuters, FCA CEO Mike Manley told employees to remain focused on the business of selling Jeeps and Rams, saying, “We have aggressive goals and high expectations to meet as FCA well into 2020. Let’s deliver them all.”

He added that the binding agreement signed Wednesday kicks off “an extended process of regulatory and shareholder approvals which could take from 12 to 15 months.”

[Image: Fiat Chrysler Automobiles]

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  • Indi500fan Indi500fan on Dec 18, 2019

    I'm thinking the Citroen Hellcat Stinkeye Narrowbody is gonna be HUGE in Europe....

  • Pete Zaitcev Pete Zaitcev on Dec 19, 2019

    When was the last time anyone at FCA was able to design a car? Gulia, right? In the U.S., the only thing they managed to make was the JL. But before that, it was Mitsubishi DS platform, then the old E-series, then Dart, then Renegade -- all imported. If not a BOF, the last time they did anything was PT (Cruiser), based on PL 2K (Neon).

  • Denis Jeep have other cars?!?
  • Darren Mertz In 2000, after reading the glowing reviews from c/d in 1998, I decided that was the car for me (yep, it took me 2 years to make up my mind). I found a 1999 with 24k on the clock at a local Volvo dealership. I think the salesman was more impressed with it than I was. It was everything I had hoped for. Comfortable, stylish, roomy, refined, efficient, flexible, ... I can't think of more superlatives right now but there are likely more. I had that car until just last year at this time. A red light runner t-boned me and my partner who was in the passenger seat. The cops estimate the other driver hit us at about 50 mph - on a city street. My partner wasn't visibly injured (when the seat air bag went off it shoved him out of the way of the intruding car) but his hip was rather tweaked. My car, though, was gone. I cried like a baby when they towed it away. I ruminated for months trying to decide how to replace it. Luckily, we had my 1998 SAAB 9000 as a spare car to use. I decided early on that there would be no new car considered. I loathe touch screens. I'm also not a fan of climate control. Months went by. I decided to keep looking for another B5 Passat. As the author wrote, the B5.5 just looked 'over done'. October this past year I found my Cinderella slipper - an early 2001. Same silver color. Same black leather interior. Same 1.8T engine. Same 5 speed manual transmission. I was happier than a pig in sh!t. But a little sad also. I had replaced my baby. But life goes on. I drive it every day to work which takes me over some rather twisty freeway ramps. I love the light snarel as I charge up some steep hills on my way home. So, I'm a dyed-in-the-wool Passat guy.
  • Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI coupe....it's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark V.....it was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
  • ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"
  • ToolGuy When Farley says “like the Millennium Falcon” he means "fully updatable" and "constantly improving" -- it's right there in the Car and Driver article (and makes perfect sense).