Fiat Chrysler Automobiles N.V. (NYSE: FCAU) and Peugeot S.A. have entered a binding agreement to merge and will create the 4th largest global automotive OEM by volume and 3rd largest by revenue. This will allow the merged company to leverage investment efficiency on a much larger scale to develop new mobility solutions that include new energy vehicles, autonomous driving and connectivity. The merged entity will have annual unit sales of 8.7 million vehicles with revenues of almost €170 Billion as recurring operating profit will be over €11 Billion.
The new entity will have an efficient governance structure that is focused on promoting effective performance that will have 11 Board members. Five will be nominated by FCA, including its reference shareholder John Elkann as Chairman. Five will be nominated by Groupe PSA and its reference shareholders that include the Senior Non-Executive Director and Vice Chairman. Carlos Tavares will be Chief Executive Officer for the initial five years and member of the board.
Prior to the close, FCA will distribute a special dividend to its shareholders. €5.5 Billion will be distributed to the FCA while Groupe PSA will distribute 46% stake in Faurecia. Both companies plan to distribute €1.1 Billion dividend in 2020 in regards to fiscal year 2019, that will require approval by each company’s board of directors and shareholders. On close, Groupe PSA shareholders are to receive 1.742 shares of the new company for each share of Groupe PSA whereas FCA shareholders will receive 1 share of the new entity for each share of FCA.
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.” Mike Manley, Chief Executive Officer of FCA, added: “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.”