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Wednesday, December 18, 2019

Fiat and Peugeot Sign Merger Agreement

The benefits of Fiat Chrysler and Peugeot merging

Fiat Chrysler Automobiles and Peugeot S.A. have formally agreed to merge. The two companies will combine in a 50/50 partnership headquartered in Holland and will become the 4th largest car manufacturer by volume, ahead of GM, Hyundai, Ford, and Honda. Based on 2018 numbers, the combined company had revenues of $189 billion and annual sales of 8.7 million units.

Fiat and Peugeot will become the 4th largest car company in the world.

The anticipated results of what the merger will create

Both company boards have signed the agreement, and the next phase will be getting shareholders and regulatory approvals. The transaction is expected to close within the next 12 - 15 months.

Population shifts towards living in Urban areas will change mobility requirements along with increased concerns of pollution from internal combustion engines.

The merger of FCA and PSA was spurred on by geographic changes showing populations shifts towards living in urban areas and forced government regulations mandating cars run on clean energy. Combining the two companies will allow them to better financially and technically meet the needs of this new era in mobility.

Upcoming European emission compliance road map. Talk of the "Green New Deal" represent significant challenges in the future the company needs to prepare for.

Enhanced innovation and development capabilities for the future.

Highlights of the FCA and Groupe PSA Merger

  • New entity will have the leadership, resources and scale to be at the forefront
    of a new era of sustainable mobility
  • Combines companies’ extensive and growing capabilities to address the challenge of shaping the new era of sustainable mobility
  • Combined company will be the 4th largest global OEM by volume and 3rd largest by revenue with annual sales of 8.7 million units and combined revenues of nearly €170 billion1
  • Creates a diversified business with among the highest margins in its core markets of Europe, North America and Latin America and the opportunity to reshape the strategy in other regions
  • Merger will deliver approximately €3.7 billion estimated annual run-rate synergies with no plant closures resulting from the transaction – synergies are expected to be net cash flow positive from year 1
  • Strong combined balance sheet and high level of liquidity provide financial flexibility with an investment grade credit rating expected
  • Combined company will leverage investment efficiency across a larger scale to develop innovative mobility solutions and cutting edge technologies in new energy vehicles, autonomous driving and connectivity
  • Broad portfolio of well-established iconic brands offering best-in-class products covering key vehicle market segments and delivering higher customer satisfaction
  • Excellent working relationship between the two management teams, which share successful track records in turnarounds, value creation and successful OEM combinations
  • Strong governance structure to underpin combined company performance with John Elkann as Group Chairman and Carlos Tavares as Group CEO, with a majority of independent directors2
  • Strong support of long-term shareholders (EXOR N.V., Peugeot Family Group, Bpifrance) who will be represented on the Board

The rational behind why FCA and PSA are merging

Below is the full merger presentation:

Read more:

Source and imagery: FCA

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