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Reviews PSA and Fiat review the terms of their merger contract

00:15  18 september  2020
00:15  18 september  2020 Source:   latribune.fr

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Terms of a planned merger between Fiat Chrysler and Peugeot-owner PSA are set in stone, FCA's chairman said on Wednesday, brushing off talk " The terms of the FCA- PSA deal are set in stone as binding contracts in their nature are," Elkann said in conference call after the annual shareholder

  PSA et Fiat revoient les termes de leur contrat de fusion © Provided by La Tribune

To ensure that their union remains a marriage of equals, the French car manufacturers PSA and the Italian-American Fiat Chrysler (FCA) have changed the terms a little of their marriage contract in order to take into account the impact of the pandemic on their respective accounts.

FCA has notably agreed to lower the exceptional dividend that it wishes to distribute to its shareholders before the final signing of the merger to 2.9 billion euros, against 5.5 billion euros previously.

Faurecia, adjustment variable

For its part, the PSA group plans to distribute its 46% stake in the capital of the French equipment manufacturer Faurecia to all the shareholders of the new company, called Stellantis, and not to its only shareholders as provided for in the initial agreement.

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In the months ahead, Fiat and PSA need to focus on getting through the health crisis and rebuilding their balance sheets, he said. The comments indicate the terms of the planned merger aren’t set in stone and could be revisited. The pandemic has triggered a seismic shift in the outlook for the industry

Fiat Chrysler and PSA of France said Wednesday that they had agreed to the terms of a merger that would create the world’s fourth largest automaker. In addition to Fiat , Peugeot and Citroën, their car brands will include Alfa Romeo, Dodge muscle cars, Ram trucks, Jeep sport utility vehicles, Opel and

These changes "preserve the original balance of the merger agreement," the two companies stressed on Monday in a joint statement.

Their union, announced at the end of 2019, should give birth to the world's fourth largest automotive group in terms of volume and third in terms of turnover, housing iconic brands such as Peugeot, Citroën, Opel, Jeep, Alfa Romeo and Maserati under the same roof.

Read also: Will the Fiat-Peugeot merger take place?

But since then, the pandemic has struck and has had an impact on the finances of the automotive industry, between dealer closures and containment measures.

Doubts had been expressed in recent months on the balance of the financial package.

PSA and Fiat had already announced in May that they were waiving the payment of an ordinary dividend of 1.1 billion euros each expected as part of their marriage, due to the health crisis.

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Fiat Chrysler Automobiles and Peugeot maker PSA have reached a binding agreement over their roughly billion France's PSA and Italian-American Fiat Chrysler Automobiles (FCA) announced a preliminary deal six The terms were little changed in the binding deal announced on Wednesday

After EU antitrust regulators said they opened a four-month investigation into their proposed merger , Fiat Chrysler and PSA Group say in a joint statement * will detail “Substantial benefits” of proposed merger to commission. * preparations for merger are advancing

But the amount of the exceptional dividend of 5.5 billion euros that FCA was to distribute to its shareholders as well as the distribution of Faurecia shares were still ticking because Faurecia's market capitalization has melted since the announcement of the engagement in December. This mechanically played against the shareholders of the French manufacturer.

Synergies revised upwards

With the changes announced on Monday, "the respective shareholders of FCA and Groupe PSA will receive the equivalent of 23% of Faurecia's capital (...), while their 50/50 stake in Stellantis - a group which will now have 2.6 billion euros in additional liquidity on its balance sheet - will remain unchanged, "the statement said.

"In addition, it was also agreed that the boards of the PSA and FCA groups may consider a distribution of 500 million euros to the shareholders of each company before the final signature or, alternatively, a distribution of 1 billion euros to all Stellantis shareholders after the final signing, ”the document adds.

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The merger between Groupe PSA and Fiat Chrysler Automobiles was driven by the need to meet Fitch Solutions said, longer term , the merger will lead to improving operating margins as about 70 I also love to drive their magnificent machines, and their more modest ones. I’ll be telling you if the

PSA and Fiat have said they aim to reach a binding outline in the coming weeks, but still face questions over potential job losses, as well They all have their history and their strengths," Tavares said. Few carmakers have as large a portfolio, with German rival Volkswagen counting 10 passenger brands, if

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These possible gifts to shareholders will depend on the respective performance of the manufacturers as well as on market conditions.

The changes were approved "unanimously" by the boards of directors of the two companies "with the strong support of their reference shareholders".

They say they are "more than ever convinced of the merits of this merger and of the potential for creating value".

The groups now estimate that their merger should save 5 billion euros per year, against 3.7 billion initially.

"Stellantis 'revised upward prospects for synergies and long-term value creation now allow key shareholders to modify certain financial terms to further strengthen Stellantis' balance sheet at its start-up, all in a Covid context ", said a spokesperson for PSA to AFP.

"This will allow Stellantis to start with an even stronger balance sheet", he added.

Finally, PSA and Fiat Chrysler still plan to seal their union by "the end of the first quarter of 2021".

Read also: How Carlos Tavares turned PSA into an

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