Shareholders of Fiat Chrysler and PSA validated the merger on Monday afternoon. The union will give birth to the 4e global automotive group.
It is a merger that will have taken many months to materialize, but which is now reaching its goal. On Monday, the shareholders of PSA, followed a few hours later by those of Fiat Chrysler, validated the Peugeot-Fiat union. A Franco-Italian-American marriage designed to reach critical mass in a revolutionizing automotive market. 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. It will be effective on Saturday January 16, the French and Italian-American groups said on Monday.
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 of living 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 matter of survival, and that goes for Fiat as well 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. “
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A merger on an equal footing
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.
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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.
What future for factories?
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’s 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 delegate at PSA.
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“Today, the FCA group is a great unknown for us,” however tempers the trade unionist. “What synergies will be found? What potential consequences for sites located in France? Christine Virassamy, CFDT central union delegate, expects a firm commitment from Stellantis on factories and research centers. “It is the social and ethical aspect that will allow us to say whether this merger is a success or not,” she underlines.
Phitrust warns that Fiat has no room for maneuver in Italy, where it has taken out a state-guaranteed loan to the tune of 6 billion euros. “The French factories of PSA could become the adjustment variable, causing heavy job losses,” says the fund.