Following the adjustment of the terms of merger between PSA Peugeot Citroën and Fiat Chrysler (FCA), “the merger project is still gaining in credibility”, welcome Oddo BHF analysts, who are counting on a green light from the authorities of the competition.
PSA Peugeot Citroën and Fiat Chrysler (FCA) are experiencing contrasting fortunes on the stock market, following the announcement of an adjustment to the terms of their merger. While Peugeot shares remain stable, those of Faurecia (a subsidiary of PSA) plummet, while FCA soars to the Milan stock exchange. In view of the PSA-Fiat Chrysler marriage, it remains more attractive to be a shareholder of FCA than of the Sochaux firm, judge Invest Securities. The two car manufacturers have adjusted the conditions of their merger in order to strengthen the cash flow of Stellantis (the name of the new Franco-Italian-American giant), while maintaining the initial major balances of the planned merger.
On the FCA side, the exceptional dividend is reduced to 2.9 billion euros (against 5.5 billion previously). As for PSA, the “spin-off” of the 46.3% stake in Faurecia will finally take place after the merger. The savings objective (synergies) has been raised to more than 5 billion (against 3.7 billion initially planned), for an estimated cost of implementation increased from 2.8 to 4 billion. An additional cost which could “suggest a more significant workforce reduction plan in response to the less favorable volume environment”, Oddo judges.
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“The two players emerge as winners while the merger project is gaining even more credibility and there is now only the European antitrust that could stand in the way (which is by no means our scenario)”, welcomes the Franco-German financial institution, which targets 20 euros on Peugeot shares and 12 euros on FCA (against 10 euros previously).
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