FCA-PSA merger, agreement on maxi-dividend and assets revised

The coupon drops from 5.5 to 2.9 billion. Faurecia (components) remains within Stellantis and is distributed to the two partners. The Stock Exchange rewards the title of the Italian-American group

FCA and PSA review part of the agreement for the creation of the fourth world automotive group, Stellantis, resulting from the equal merger of the two partners. In particular, Fiat Chrysler and Peugeot modify the part concerning the maxi dividend of 5.5 billion that was provided for in the preliminary agreement, the so-called combination agreement, signed last December 17th. The reason for the novelty, according to what we read in the joint note of the two auto groups, comes from the analysis of the impact of the coronavirus pandemic on the automotive industry in terms of liquidity.

what changes

The new agreement provides for a dividend of 2.9 billion to be distributed to FCA shareholders (instead of the 5.5 initially planned, as mentioned). A second big news concerns Faurecia, a component group currently controlled by Psa which holds 46% and whose capitalization is 5.867 billion. For Faurecia there was the project of spin off, that is the actions necessary to make an independent company, for the subsequent sale. In reality, the first version of the agreement provided for the distribution of its stake to PSA shareholders. Now, however, Faurecia will remain under the control of Stellantis and will be distributed, 23% each, to FCA and PSA shareholders. In addition, the payment of a dividend of 500 million euros to the shareholders of each company or, alternatively, the distribution of one billion to all the shareholders of Stellantis will be assessed before the merger is concluded. closing happened. However, the decision on the extra dividend will be made by evaluating the market trend and the prospects.

Times

In the joint note from Psa and FCA, in addition to confirming all the other aspects contained in the combination agreement, the two companies reaffirm the timing of the merger which will be completed by the first quarter of 2021. Instead, the estimated annual savings that will be obtained with synergies increase from 3.7 billion to over five. However, there is an independent variable that should not be underestimated. The European Antitrust has extended the deadline for closing the investigation concerning competition on commercial vehicles up to 3.5 tons until 13 November; Brussels wants to understand if the new group could have a dominant position on the van market, in contrast with competition rules.

FCA and Psa well on the stock exchange

“With this new decisive step, we are approaching our goal overall in the best possible conditions,” said Carlos Tavares, CEO of Psa and CEO of Stellantis (John Elkann will be president). “Today’s announcement – said Mike Manley, CEO of FCA – is a further strong signal of the common determination to ensure that Stellantis has all the resources it needs”. The announcement of the change in the agreement is rewarding in the FCA stock exchange whose stock, on Tuesday at lunchtime in Piazza Affari, marks a rise of 10.2%, while Psa on the Paris market gains 2.8%. Financial analysts are looking with interest at the possibility of an additional dividend of 500 million per shareholderclosing, or a billion post-merger.

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