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Summary
- Stellantis, formed by the merger of FCA and PSA, started on a positive note on the European stock market.
- It is set to commence its journey on the New York Stock Exchange today.
- The merged company is now the world’s fourth-largest auto firm with multiple brand offerings and geographically diverse market penetration.
Fiat Chrysler Automobiles (FCA) and Groupe PSA have agreed to merge and form Stellantis, the fourth-largest automobile company by volume in the world. The USD 52 billion deal was finalised after a discussion for over a year.
Source © Kalkine Group 2021
The debutant is ready "to brighten with stars", which is the meaning of its name Stellantis, derived from the Latin root "stello". PSA's former CEO Mr Carlos Tavares will serve as the Stellantis CEO.
Stellantis is all set to aid the new-age electric driving while competing with Toyota and Volkswagen. According to FCA and PSA, Stellantis has the potential to reduce annual costs by more than EUR5 billion or USD 6.1 billion without any plant closures.
On 18 January 2021, the newly formed entity began trading on Euronext, Paris and on the Borsa Italiana in Milan. It is expected to commence trading on the New York Stock Exchange (NYSE) from today (19 January 2021) onwards.
Transaction Details: The completion of the transaction would result in FCA shareholders getting one share of Stellantis for each FCA share and PSA shareholders receiving 1.742 shares of Stellantis for each PSA share, as per 15 January FCA market release.
High Expectations from Stellantis
Stellantis has successfully debuted on the European stock market, gaining around 7.6% on the first day of trading.
The merged entity is expected to play a crucial role in the electric vehicle market. It is likely to have an annual production capacity of nearly 8 million vehicles and revenues of over EUR165 billion.
Image source: Pixabay
The company will have 14 brands under its umbrella. It includes FCA's US-focused Jeep, Dodge, Ram, Fiat and Maserati and PSA's Opel, DS, Peugeot, and Citroen.
Stellantis will benefit from the robust position of FCA and PSA in various significant markets. It is expected to leverage the merged companies' strong brand values, various successful offerings, significant scale, and geographically diverse markets.
Both the companies have an excellent reputation when it comes to managing merger & acquisition activity. They understand the art of reviving an underperforming company through a merger.
FCA and PSA do not have much of the reputation in the luxury vehicle segment and in the Chinese market, which is the biggest automotive market, globally. So, these are the two areas where the merged entity might need to strengthen its position.
In its Q3 report, FCA unveiled adjusted EBIT of EUR2.3 billion and EUR2.5 billion and margins of 8.8% and 13.8%, for the Group and North America, respectively. The net profit stood at EUR1.2 billion while adjusted net profit was EUR1.5 billion.
