Sergio is smiling (upon FCA+PSA)
When he was running Fiat Chrysler Automobiles, Sergio Marchionne’s goal was to merge with another company to build a global automotive powerhouse capable of surviving the changes he saw on the horizon.
Somewhere, Marchionne’s spirit is smiling: the merger of Fiat Chrysler Automobiles N.V. and PSA Group is a “go.”
According to a press released early this morning, FCA’s board of directors and the supervisory group at PSA have unanimously agreed to pursue an all-stock, 50/50 merger. The shareholders in each company would own 50% of the shares in the new company.
The plan calls for the creation of a Dutch parent company which would then merge its subsidiaries. As mentioned in yesterday’s report, current FCA Chairman John Elkann would retain his position in the new company while PSA CEO Carlos Tavares would take the helm.
The current scuttlebutt has FCA CEO Mike Manley becoming the COO of the North American market. This is a more important role than it might appear; North America is FCA’s primary economic engine and it’s an important target for PSA, which reportedly hopes to reintroduce the Peugeot brand to the U.S. and Canada by 2026. Editor’s note: this would dispel any belief that Chrysler was to be rejuvenated with Peugeot vehicles.
A memorandum of understanding will be prepared after the current discussions are finalized in the near future.
The new company would be the fourth-largest automaker in the world with revenues of nearly $190 billion, based on 2018 results. Operating profit is forecast at about $12.3 billion.
The merger would save an estimated $4.1 billion based on increased purchasing power and better allocation of resources for product and other investments.
The companies are not forecasting any savings based on plant closures, a topic that could create some opposition in the U.S. and a lot of opposition in Europe.
There is no set timetable for the merger. Both companies will need to get approval from shareholders and regulatory authorities.
No name has yet been announced for the new company, but if it is going to be based on the money and clout each brings to the table, I vote for ChryslerPeugeot, N.V. Of course, if anyone wanted to honor Marchionne, they could name it Chrysler Peugeot Automobiles. CPA, N.V. would be perfect to commemorate a self-proclaimed capital junkie.
Bill Cawthon was born in the Motor City and grew up with Chrysler. His Dad was a graduate of Chrysler Institute and started his career in road test back in the days when it meant testing the cars on actual public roads. Bill spent many weekends on the plant floor at the old Dodge Main in Hamtramck. He’s been writing about cars and Mopars for about 20 years and also writes about the business side of auto industry for an international industry publication. Bill lives near Houston, Texas and is an active member of the Texas Auto Writers Association.