Fiat Chrysler and Peugeot Citroen tweak merger terms due to pandemic
16 Septembre, 2020, 00:38 | Auteur: Auguste Feret
Fiat Chrysler (FCA) and Peugeot Citroen (PSA) announced on Monday they'd modified the terms of their mega-merger in light of business disruptions caused by Covid-19.
Under the revised terms, FCA will cut from 5.5 billion euros ($6.5 billion) to 2.9 billion euros the cash portion of a special dividend its shareholders are set to receive on conclusion of the merger.
FCA and PSA, which past year agreed to merge to give birth to Stellantis, the world's fourth largest vehicle manufacturer, said late on Monday they had amended the accord to conserve cash and better face the COVID-19 challenge to the auto sector.
In addition, PSA will scrap the planned spin-off of its 46 per cent stake in parts supplier Faurecia.
The exceptional dividend that FCA was to distribute to its shareholders along with the distribution of Faurecia's shares were also issues of concern, since the French equipment makers's market capitalization has declined since the merger's announcement.
"Amendments preserve the balance of original combination agreement", the two groups said, adding that ownership of Stellantis would still be split 50/50 between current PSA and FCA shareholders.
FCA and PSA said annual estimated synergies from their merger were now seen at more than €5 billion, compared with an initial estimate of over €3.7 billion.
"Of the two, FCA might be a bit more of a victor in the short term given the structure of the deal and the numerous payouts to shareholders to come in the quarters ahead (potentially close to 5 billion euros versus the current capitalization of around 16 billion euros)".
Confirming last week that the deal was on track, FCA's chief executive Mike Manley said both he and PSA CEO Carlos Tavares were aware of the need for the two firms to get to the merger with the strongest balance sheets possible as well as for shareholders to get what they expected.
The two carmakers confirmed that they expect to complete the tie-up process by the end of the first quarter of 2021.
Both companies have this year scrapped dividend payments on 2019 results, each worth 1.1 billion euros, as the sector grapples with the pandemic which has sent auto sales plunging.
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