Tag: Fiat

Fiat Chrysler’s merger with Peugeot maker PSA will include a loyalty scheme to reward long-term investors and help prevent future takeover attempts, the prospectus for the planned tie-up shows. Italian-American carmaker Fiat Chrysler (FCA) and France’s PSA agreed to combine in a $38 billion all-share deal in December, uniting brands such as Fiat, Jeep, Dodge, Ram and Maserati with the likes of Peugeot, Opel, Citroen and DS.

Holders of shares in Stellantis – as the merged group will be known – for an uninterrupted period of at least three years may receive a special voting share in addition to each common share, the companies said in the prospectus.

Such a move could make management changes and takeover attempts of Stellantis more difficult, they added. The tax consequences of the loyalty scheme are uncertain, the companies said.

Stellantis will have a Dutch-domiciled parent company and its shares will be listed in Paris, Milan and New York.

Loyalty schemes are common for companies in the Netherlands and have already been used by Exor, the holding company of Italy’s Agnelli family and FCA’s controlling shareholder, not least during the spin-off of Ferrari, boosting Exor’s grip on the luxury sports car maker.

PSA CEO Carlos Tavares will run Stellantis and will receive a 1.7 million euro ($2.02 million) bonus upon completion of the merger.

FCA CEO Mike Manley will receive “a recognition award with a value equivalent to approximately five times his annual base salary” and a cash retention after the merger if certain conditions are met.

The two companies said they have agreed to review the potential distribution of 1 billion euros to shareholders, either through a dividend evenly before the merger, or to be distributed afterwards by Stellantis.

PSA and FCA have filed the merger plan with antitrust authorities in 21 countries and the European Union. To date, they have obtained approval from 15 countries and a preliminary okay from Brazil which becomes final next week. The EU is also expected to authorise the merger, sources have said.

Fiat Chrysler Automobiles and Peugeot S.A. have today signed a binding Combination Agreement providing for a 50/50 merger of their businesses. This merger creates the 4th largest global automotive OEM by volume and 3rd largest by revenue. The proposed combination will be an industry leader with the management, capabilities, resources and scale to successfully capitalize on the opportunities presented by the new era in sustainable mobility.

The combined company will have annual unit sales of 8.7 million vehicles, with revenues of nearly 170 billion Euros, recurring operating profit of over 11 billion Euros and an operating profit margin of 6.6 percent, all on a simple aggregated basis of 2018 results.

The combined entity will have a balanced and profitable global presence with a highly complementary and iconic brand portfolio covering all key vehicle segments from luxury, premium, and mainstream passenger cars through to SUVs and trucks & light commercial vehicles. This will be underpinned by FCA’s strength in North America and Latin America and Groupe PSA’s solid position in Europe. The new Group will have a much greater geographic balance with 46 percent of revenues derived from Europe and 43% from North America, based on aggregated 2018 figures of each company. The combination will bring the opportunity for the new company to reshape the strategy in other regions.

The efficiencies that will be gained from optimizing investments in-vehicle platforms, engine families and new technologies while leveraging increased scale will enable the business to enhance its purchasing performance and create additional value for stakeholders. More than two-thirds of run rate volumes will be concentrated on 2 platforms, with approximately 3 million cars per year on each of the small platform and the compact/mid-size platform.

Carlos Tavares, Chairman of the Managing Board of Groupe PSA, said: “Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services. I have every confidence that with their immense talent and their collaborative mindset, our teams will succeed in delivering maximized performance with vigor and enthusiasm.”

This technology, product and platform-related savings are expected to account for approximately 40% of the total 3.7 billion Euros in annual run-rate synergies while purchasing – benefiting principally from scale and best price alignment – will represent a further estimated 40% of the synergies. Other areas, including marketing, IT, G&A and logistics, will account for the remaining 20%. These synergy estimates are not based on any plant closures resulting from the transaction. It is projected that the estimated synergies will be net cash flow positive from year 1 and that approximately 80% of the synergies will be achieved by year 4. The total one-time cost of achieving the synergies is estimated at 2.8 billion Euros.

Mike Manley, Chief Executive Officer of FCA said, “This is a union of two companies with incredible brands and a skilled and dedicated workforce. Both have faced the toughest of times and have emerged as agile, smart, formidable competitors. Our people share a common trait – they see challenges as opportunities to be embraced and the path to making us better at what we do.”