PSA shareholders approved on Monday the group’s union with Fiat-Chrysler (FCA), a Franco-Italian-American marriage designed to reach critical size in an automotive market undergoing a revolution.
The PSA-FCA union will give birth to the world’s fourth largest automotive group in terms of vehicles sold, and the third in turnover behind the Japanese Toyota and the German Volkswagen.
After the vote of the shareholders of the French PSA on Monday morning, the shareholders of the Italian-American FCA must validate the merger on Monday afternoon. Its effective date must be announced “very quickly” according to the president of the management board of PSA and future general manager of the new group called Stellantis, Carlos Tavares.
Stellantis will have more than 400,000 employees and will house in the same garage 14 emblematic brands such as Citroën and Maserati (already briefly married 50 years ago), Fiat and Opel, Peugeot and Alfa Romeo, Chrysler, Dodge or Jeep.
“I have rarely had the feeling as much as today to live a moment of history”, declared the emblematic chairman of the supervisory board of PSA, Louis Gallois, who is retiring following this merger. .
“This merger was a question of survival, and that goes for Fiat as for PSA”, according to Giuliano Noci, professor of strategy at the Polytechnic business school in Milan. The two groups are facing “enormous technological and strategic challenges” (electric vehicles, digitization, autonomous driving) and the devastating effects of the Covid-19 pandemic.
“Only the most agile, in a Darwinian spirit, will survive,” Carlos Tavares had launched in November.
The group’s brands will in particular reduce their development and construction costs, and complete their offer in all ranges.
“Thanks to its union with PSA, Fiat-Chrysler will be able to strengthen its presence in Europe,” adds Giuseppe Berta, professor at Bocconi University in Milan and Fiat specialist. “Conversely, the French group will be able to regain a foothold in the United States thanks to its Italian-American ally”.
– An amended merger –
The shareholders’ vote seals a union envisaged since 2018, announced at the end of 2019, and whose preparation was slowed down by the coronavirus crisis.
At the end of December, the European Commission gave the green light to the marriage of the Fiat 500 and the Peugeot 208, on condition that the two groups respect their commitments made to preserve competition in small commercial vehicles, where they hold large market shares. .
They had previously amended their contract so that their union remained a marriage of equals, while the pandemic affected their respective accounts.
FCA has notably agreed to lower the amount of an exceptional dividend paid to its shareholders. For its part, PSA has decided to sell 7% of the French equipment manufacturer Faurecia before distributing the rest to the shareholders of Stellantis. The participation of the Chinese group Dongfeng should also be reduced.
This is insufficient according to the Phitrust fund, which holds less than 1% of the capital of PSA and criticizes since the announcement of the merger a lack of “balance between the parties” for the benefit of the Italo-Americans.
“FCA needs PSA more for the implementation of synergies than the reverse” and “PSA is more efficient than FCA on various key aspects”, notably underlined the fund.
– No factory shutdown? –
In the documents provided to the financial authorities, PSA and Fiat estimate that their merger should cost 4 billion euros, and that the synergies will ultimately save up to 5 billion per year.
Carlos Tavares stressed at the end of 2019 that no plant closures were planned. The unions allow themselves to doubt it.
“Overall it is a good insurance for the future of our group. Those who will not take this turn will risk being left behind,” comments Franck Don, central CFTC union representative at PSA.
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