FCA-PSA Merger: Investors to Meet in January To Approve Transaction

Summary

• The shareholders’ meetings of both the company’s will be held on 4 January
• The combined entity is set to become the world’s fourth-largest automaker
• The FCA board had approved the initial terms for merging the two in December 2019

The merger process of London-headquartered world’s eighth-largest automaker Fiat Chrysler Automobiles (FCA) and France-based automaker Peugeot SA (PSA) has moved a step forward. Both FCA and PSA have scheduled shareholders' meetings in January to approve the merger transaction, which will be held on 4 January. In the scheduled meeting, the shareholders of both the companies are expected to give the go-ahead to the amalgamation, thereby, allowing the creation of Stellantis. 

Following the successful completion of merger along with the regulator’s approval, the combined entity will become the world’s fourth-largest automobile manufacturer by volume. The draft resolutions and agenda to the shareholders’ vote and the definitive conditions of participation in the aforementioned meetings has been conveyed in the present week itself on 23 November. The same will be made available on the web portals of both the automakers, respectively. 

Prospectus approval & listing of shares

On 20 November, the financial markets authority of Netherlands (Autoriteit Financiële Markten) approved the prospectus with regard to the listing and trading of FCA shares in Europe following the undergoing merger process of FCA and PSA, the automakers informed. Upon the finalisation of the cross-border merger, the FCA shares will be renamed as Stellantis. 

Borsa Italiana SpA will organise and manage the shares listed on Euronext Paris. The new FCA shares, set to be issued to PSA shareholders, will be admitted to trading on Italy’s equity market Mercato Telematico Azionario (MTA). As of now, PSA ordinary shares are listed on Euronext Paris. 

Additionally, the shares of the merged business unit will also be floated on the New York Stock Exchange (NYSE). Presently, the shares of Fiat Chrysler Automobiles NV (NYSE:FCAU) are listed on NYSE. The prospectus of the merger has been prepared in accordance with the listing and admission of shares, issued in the cross-border merger to trading on MTA and Euronext Paris. 

Post-merger merits

• There are various added advantages that would arise after the merger as the combined auto giant will engage itself in dealing with a diverse range of customers from America to Europe.
• With the cross-border merger of Fiat Chrysler Automobiles NV and Groupe PSA, the resultant group will create the fourth-largest automotive original equipment maker in terms of volume on the basis of 2019 financial results, thereby, creating a more competitive leader in the industry.
• The market penetration of both the automakers in their respective geographical locations will extend the dominance of the combined entity collectively channelising FCA’s stronghold in North and Latin America and a solid position of PSA in the European region. A likelihood of greater geographical balance is there with the successful completion of the merger.
• The cross-border merger transaction is expected to create a relatively stable group that will be better equipped to withstand the economic downturns as compared to the present individual capabilities of both the companies.

On 17 December 2019, the board of FCA approved the initial terms for the combination of Fiat Chrysler Automobiles and Peugeot SA after receiving the consultations from the management of FCA along with recommendations of legal and financial advisors appointed externally. Recently, on 14 September, the board unanimously approved the amendments of some terms pertaining to the merger.  

FCA boasts a strong portfolio of globally populated brands including Chrysler, Dodge, Fiat, Fiat Professional, Maserati, Jeep®, Lancia, Ram, Abarth and Alfa Romeo with in-house expertise of designing, engineering and manufacturing units. On the other hand, Groupe PSA has a five-brand portfolio of cars including Peugeot, Opel, Citroën, Vauxhall and DS providing distinctive automotive experiences accommodating the varied expectations of different customers.