Fiat Chrysler, Peugeot shareholders OK merger

New company will be 4th biggest, have capacity to produce 8.7M cars a year

MILAN — Shareholders of Fiat Chrysler and PSA Peugeot voted Monday to merge and create the world’s fourth-largest auto company, which, its architects hope, can more readily take on an enormous technological shift in the industry.

Addressing separate meetings, PSA Peugeot CEO Carlos Tavares and Fiat Chrysler Chairman John Elkann spoke of the “historic” importance of the merger, which combines car companies that helped write the industrial histories of the United States, France and Italy.

Tavares will run the new company, while Elkann stays on as chairman.

The only real hurdle left to closing the deal is listing shares of the new company, to be called Stellantis. The companies expect it to be finalized Jan. 16, with shares in the combined company trading Jan. 18 in Milan and Paris and Jan. 19 on the New York Stock Exchange.

Fiat Chrysler shares were up 0.2% in New York on Monday at $18.13, while Peugeot rose 1.7% to 22.75 euros.

Fiat Chrysler announced Monday that its stockholders as of Jan. 15 will get a special cash payment worth $2.26 per common share after the merger closes. The payments will cost $3.56 billion.

The new company will have the capacity to produce 8.7 million cars a year, behind Volkswagen, Toyota and Renault-Nissan, and create $6.1 billion in annual savings.

The marriage of the Italian-American and French rivals is built on the promise of cost savings in the capital-hungry industry during a technological shift to electrified powertrains and autonomous driving.

But what remains to be seen is if it will be able to preserve jobs and heritage brands in a global market still suffering from the pandemic.

“Together, we will be stronger than individually,” Tavares told a virtual gathering of shareholders. “The two companies are in good health. These two companies have strong positions in their markets.”

The new company will put together French mass-market carmakers Peugeot and Citroen, top-selling Jeep, and Italian luxury and sports brands Maserati and Alfa Romeo — pooling brands with histories spanning from 75 to over 120 years with strong emotional pull in their home markets.

“We are living through a profound era of change in our industry,” said Elkann, heir to the Fiat-founding Agnelli family and Fiat Chrysler’s biggest shareholder. “We believe that the coming decade will redefine mobility as we know it.”

While the tie-up is billed as a merger of equals, the power advantage goes to PSA, with Tavares running Stellantis and holding the tie-breaking vote on the 11-seat board. Tavares will take control of the company, possibly by the end of January.

Fiat Chrysler CEO Mike Manley will head North American operations, which is key to Tavares’ longtime goal of getting a U.S. foothold for the French carmaker he has run since 2014, and the clear moneymaker for Fiat Chrysler.

Manley said about 40% of the savings will come from combining platforms, the underpinnings of vehicles, and engines and transmissions. Such a deal was long wanted by Fiat Chrysler’s long time CEO Sergio Marchionne, who had predicted the necessity of consolidation in the industry. He was unable to find a deal before his sudden death in July 2018.

The French and Italian economic ministers, in a joint statement, said the new company will strengthen Europe’s industrial leadership.