London, England – When Fiat Chrysler Automobiles (FCA) agreed to merge with France’s Peugeot Citroen (PSA Groupe) late last year, the novel coronavirus that has wrecked havoc on the global economy was just being identified in China.
More than9 months later, the auto industry is suffering through a global recession, auto sales will likely hit a 10-year low, and assumptions underlying the deal have to be reworked. The automakers still plan to merge, but they amended terms significantly. Changes include:
- Slashing special dividends nearly in half – FCA plans to pay out $3.44 billion to its shareholders at the completion of the deal, but that’s nearly half the $6.53 billion investors had been expecting.
- FCA shareholders to get a chunk of Faurecia – PSA Groupe had planned to spin off its 46% stake in the global Tier 1 automotive supplier to its shareholders before completion of the merger with FCA. Instead, Faurecia shares will go to FCA and PSA investors. The companies say the change was necessary to maintain the 50/50 merger of equals envisioned in the deal.
The merged company will still be called Stellantis and executives say the deal should be finalized by the end of 2021’s first quarter.
PSA Chairman Carlos Tavares said, “We are moving all together towards our goal in the best possible condition with even greater prospects for Stellantis.”
FCA CEO Mike Manley added, “I cannot commend highly enough the commitment of the teams working towards the launch of Stellantis and of all our people in overcoming the extraordinary challenges COVID-19 has presented.”