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5 Jan 21

PSA-FCA merger gets European green light, also approved by shareholders

In the final days of the year, the European Union delivered what must be the most important automotive news of 2020 by approving the merger of PSA and FCA.

Update on 4 January 2021: Shareholders of FCA and PSA have also approved the merger of both companies to create Stellantis NV by a majority of more than 99% of the votes cast. FCA and PSA expect to complete the combination on 16 January 2021. Stellantis' shares will begin trading on Euronext in Paris and on Mercato Telematico Azionario in Milan on 18 January and on the New York Stock Exchange on 19 January.

The new holding company, Stellantis, will be the biggest automotive group in Europe and the fourth largest in the world, behind Volkswagen Group, Toyota and Renault-Nissan but before both Ford and GM.

Stellantis will have a large and varied portfolio including strong PSA brands like Peugeot, Citroën, Opel/Vauxhall, somewhat underperforming DS and its successful FCA brothers at RAM and Jeep alongside problem children like Fiat, Alfa Romeo, Dodge, Chrysler, Maserati and Lancia – it is unclear if Lancia is still alive.

In a press release, European Commission Vice President Margrethe Vestager said: “We can approve the merger of Fiat Chrysler and Peugeot SA because their commitments will facilitate entry and expansion in the market for small commercial vans,” in reference to the conditions attached to the merger. Indeed, the EU worried the new group’s hold on the LCV market would be too big but Brussels was convinced by PSA’s promise to ramp up production of Toyota vans as part of its joint venture with the Japanese carmaker.

Et tu, Tesla?

The merger could also affect Tesla, as FCA will benefit from PSA’s success in staying well below its CO2 targets, meaning FCA will no longer be required to pool its fleet with Tesla in an effort to meet its CO2 targets. Today, selling environmental credits is Tesla's biggest profit centre.

The new group is hoping to achieve $6 billion in annual operating cost cuts while keeping all factories open – at least for the time being. Observers expect the more troubled FCA brands to bear the brunt of these cuts. In its press release, Stellantis writes that PSA is the acquirer of FCA “for accounting purposes”. The statement is unconvincing as many consider it to effectively be a PSA takeover.

Image copyright: Shutterstock

Authored by: Benjamin Uyttebroeck