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Fiat Chrysler and Peugeot Shareholders Approve Merger

By Rich Duprey - Jan 4, 2021 at 11:39AM

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New company will be called Stellantis and will trade on the NYSE and other global bourses.

Goodbye Peugeot ( PUGOY ) and Fiat Chrysler ( FCAU ), hello Stellantis! 

Shareholders of both French automaker PSA Group and Fiat Chrysler approved the merger of the two companies with a combined market value of about $54 billion.

The deal originally indicated the union of the two companies would create the fourth-largest global automaker by volume based on 2019 sales, but adjusted for 2020 COVID–19 impacts, Stellantis will reportedly rank sixth on the list in sales.

The executives of Fiat and PSA have said the merger will give them scale to put them on par with Toyota and Volkswagen and boost their returns.

Dashboard of Fiat Chrysler car

Image source: Fiat Chysler.

Ready to take on the world

The name of the new company, Stellantis, is said to come from the Latin verb stello, meaning "to brighten with stars." It will bring together a portfolio of well-known brands beyond just Fiat, Chrysler, and Peugeot, as it extends to include Dodge, Maserati, Alfa Romeo, Opel, and Citroen.

Industry site Edmunds forecasts 2020 industry sales will come in around 14.4 million, a 15% drop from last year, but Fiat Chrysler will experience a 17% decline to 1.8 million vehicles, held back in part by the Alfa Romeo and Maserati brands. Offsetting the decline is the strong Jeep and Ram truck divisions.

PSA is bringing a revitalized Peugeot and Citroen into the mix.

Fiat Chrysler shareholders will receive a special dividend of 2.9 billion euro (about $3.4 billion) before the merger is completed, reduced from 5.5 billion euros after PSA said the pandemic-damaged industry made the original payout too rich.

Together, Fiat Chrysler and Peugeot hope to use their combined strength to support investments in cleaner vehicles as well as streamline operations to reduce costs and improve profits. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Fiat Chrysler Automobiles N.V. Stock Quote
Fiat Chrysler Automobiles N.V.
FCAU
Toyota Motor Corporation Stock Quote
Toyota Motor Corporation
TM
$187.44 (1.54%) $2.85
Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
VWAGY
$29.67 (4.14%) $1.18
Peugeot S.A. Stock Quote
Peugeot S.A.
PUGOY

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