It seems that the merger between PSA and FCA will go ahead and the two groups have already released a statement in which they reveal the first details of this "marriage" and in which they explain how it could work.
To start with, PSA and FCA have confirmed that the merger that could create the world's 4th largest manufacturer in terms of annual sales (with a total of 8.7 million vehicles/year) will be 50% owned by PSA shareholders and in 50% by FCA shareholders.
According to the estimates of both groups, this merger will create a construction company with a consolidated turnover of approximately 170 billion euros and a current operating result of more than 11 billion euros, when considering the aggregate results of 2018 .
How will the merger be done?
The statement now released states that, should the merger between PSA and FCA actually take place, the shareholders of each company will hold, respectively, 50% of the capital of the new group, thus sharing, in equal parts, the benefits of this business.Subscribe to our newsletter
According to PSA and FCA, the transaction will take place through a merger of the two groups, through a Dutch parent company. With regard to the governance of this new group, it will be balanced between the shareholders, with the majority of the directors being independent.
As for the Board of Directors, it will be composed of 11 members. Five of them will be appointed by PSA (including the Reference Administrator and Vice President) and another five will be appointed by the FCA (including John Elkann as President).
Carlos Tavares, CEO of PSAThis convergence brings significant value creation for all parties involved and opens up a promising future for the merged company.
Carlos Tavares is expected to assume the role of CEO (with an initial term of five years) at the same time as a member of the Board of Directors.
What are the benefits?
To start with, should the merger go ahead, the FCA will have to proceed (even before the completion of the transaction) with the distribution of an exceptional dividend of 5,500 million euros and its shareholding in Comau to its shareholders.
Mike Manley, CEO of FCAI am proud to have the opportunity to work with Carlos and his team in this merger that has the potential to change our industry. We have a long history of fruitful cooperation with Groupe PSA and I am convinced that, together with our excellent teams, we can create a protagonist in world-class mobility.
On the PSA side, before the merger is concluded, it is expected to distribute its 46% stake in Faurecia to its shareholders.
If it happens, this merger will allow the new group to cover all market segments. In addition, the joining of efforts between PSA and FCA should also allow for a reduction in costs through the sharing of platforms and rationalization of investments.
Finally, another benefit of this merger, in this case for PSA, is the weight of FCA in the North American and Latin American markets, thus helping to implement the PSA group's models in these markets.