PSA And FCA Merger Plan Officially Announced

1 November 2019 - motor1

PSA And FCA Merger Plan Officially Announced

The 50/50 merger will create the world's fourth-largest automaker.

The rumors were true – Groupe PSA and FCA have agreed to work on a 50/50 merger that will effectively lead to the creation of the fourth-largest automaker in the world, with 8.7 million cars sold annually. The plan is for shareholders of each company to own 50% of the equity of the newly combined automotive group, which is projected to achieve 80% of the synergies after four years and cut costs by approximately €2.8 billion ($3.12 billion at current exchange rates).

Based on the 2018 results of both companies, the merger will lead to combined revenues of nearly €170 billion ($189.7 billion) and a recurring operating profit of more than €11 billion ($12.2 billion). According to the agreed deal between the two parties, the merger between PSA and FCA will be done under a Dutch parent company, which will be listed on the New York Stock Exchange, Borsa Italiana (Milan), and Euronext (Paris).

Based on the agreement reached by the two automotive conglomerates, the synergies will not involve any plant closures. The newly formed board will have 11 members – five nominated by FCA, five by Groupe PSA, with Carlos Tavares as Chief Executive Officer for an initial five-year term and he would also be a member of the board.

As a refresher, Opel and Vauxhall are both underneath PSA's umbrella as the two brands were acquired from General Motors back in 2017. The newly created automotive mammoth resulted from the PSA-FCA merger will undoubtedly bring some huge changes to the industry as they'll be looking to cut costs and optimize product offerings to synchronize lineups across all brands.

Before shaking hands with Groupe PSA, FCA almost inked a deal a few months ago with Renault to work on a 50/50 merger, but the plan ultimately fell through due to rather unclear "political conditions."

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