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.
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.
