Stellantis set for road test after FCA-PSA tie-up approved

Fiat Chrysler Automobiles and Peugeot maker PSA Group shareholders have approved a $52 billion merger to create Stellantis.

Following are key details of the deal:

  • The merged group will have annual sales of 7.9 million vehicles and generate recurring operating profit of almost 10 billion euros ($12 billion) on revenue of 180 billion euros, based on aggregated 2019 results.
  • PSA CEO Carlos Tavares will be the group’s CEO for an initial five-year term. FCA Chairman John Elkann will be chairman.
  • Stellantis will be domiciled in the Netherlands, with stock listings in Paris, Milan and New York. FCA and PSA expect to complete the combination on Jan. 16, 2021. Trading in Stellantis shares begins Monday, Jan. 18.
  • The merger is expected to generate more than 5 billion euros in annual synergies. The two groups say no plants will  be closed.
  • The merger will unite brands such as Fiat, Jeep, Dodge, Ram Alfa Romeo and Maserati with Peugeot, Citroen, Opel and DS.
  • Stellantis will have 11 board members including Tavares, with five nominated by PSA and five by FCA.
  • FCA CEO Mike Manley will head the American operations of Stellantis.
  • FCA and PSA signed a binding tie-up agreement in December 2019, which was amended in September last year to reflect a change in conditions as a result of the COVID-19 pandemic.
  • Prior to completion, FCA will pay its shareholders a 2.9 billion euro special dividend. That was cut from an original 5.5 billion euros to preserve cash because of the coronavirus crisis. PSA has said it would postpone the planned spin-off of its 46 percent stake in parts maker Faurecia until after the merger’s closing and extend it to all shareholders.
  • Based on performance, market conditions and outlook, the boards of both FCA and PSA will consider a potential 500 million euro dividend to shareholders of each company before the closing of the merger or, alternatively, a one billion euro dividend to all Stellantis shareholders after the closing.
  • FCA’s robot unit Comau, initially set to be spun off before the merger with PSA, will now be separated promptly after the closing of the tie-up deal, for the benefit of all shareholders of the combined company.
  • China’s Dongfeng Motor will reduce its 12.2 percent stake in PSA by selling 30.7 million shares to the French firm in a move that eased approval for the deal in the U.S. Dongfeng will hold 4.5 percent of the merged group.
  • Major shareholders Exor, French state bank Bpifrance Participations and the Peugeot family would be subject to a three-year lock-up period. In that time, the Peugeot family would be allowed to increase its shareholding by up to 2.5 percent only by acquiring shares from Bpifrance Participations and Dongfeng.
  • Exor, the holding company of the Agnelli family which controls FCA with a 28.5 percent stake, would become the new automaker’s single largest investor, with a 14.4 percent stake.
  • A seven-year standstill period following completion of the merger — during which extraordinary operations affecting governance cannot be carried out — would apply to Exor, Bpifrance Participations, Dongfeng and the Peugeot family.
  • A loyalty plan for long-term investors will allow Stellantis’ top shareholders to tighten their grip and head off any potential hostile bidders.

FCA is being advised by Goldman Sachs and its independent board members by D’Angelin. PSA is being advised by Mediobanca’s Messier Maris & Associes and Morgan Stanley, with Perella working for its independent board member. Lazard is advising Exor.

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