The fourth largest automobile company in the world is about to be born! Peugeot Citroen and Fick merge

category:Finance
 The fourth largest automobile company in the world is about to be born! Peugeot Citroen and Fick merge


The merger between the two parties will be realized through a Dutch parent company, and the governance structure of the new company will maintain a balance between the shareholders. In the deal, PSA will have six board seats, while Fiat Chrysler will have five.

The chairman of the new company is John Elkann, chairman of FCA and head of Agnellis family. Carlos Tavares, Peugeot Citroens chief executive, will serve as the chief executive and board member for an initial term of five years.

After the merger, simply add the results of the two sides in 2018 excluding Magneti Marelli and Faurecia. The combined income is nearly 170 billion euros, and the recurring operating profit is more than 11 billion euros. The new company will also become the worlds fourth largest auto group after Volkswagen, Toyota and Renault Nissan with an annual sales volume of 8.7 million units.

It is understood that the two companies have assigned tasks to their respective teams and plan to reach a binding memorandum of understanding in the coming weeks.

The FCA also disclosed specific cooperation plans and development goals in the announcement.

Prior to the completion of the transaction, FCA will distribute a special dividend of 5.5 billion euros to its shareholders as well as its shares in Comau. In addition, Peugeot will distribute 46% of its shares in Faurecia to its shareholders before the completion of the transaction, so that the shareholders of the combined group can equally share the synergies and benefits brought by the merger.

According to the preliminary agreement, the combined new company will be listed on Euronext (Paris), Borsa Italiana (Milan) and New York Stock Exchange (NYSE), and will continue to maintain operations in France, Italy and the United States and other existing headquarters.

After the merger, the suspension period for the shares of exorn. V., bpifrance participation SA, Dongfeng Motor Group Co., Ltd. (Dongfeng Group) and Peugeot family will be 7 years. EXOR, bpifrancepartitions and Peugeot family will be locked up for three years, but Peugeot family will be allowed to hold up to 2.5% shares in the first three years after the transaction, which can only be realized by purchasing shares from bpifrancepartition and Dongfeng Group.

In addition, it is proposed that the articles of incorporation of the new company will provide for a loyally voting program in which the parties shall not grant to any single shareholder more than 30% of the total number of votes cast at a general meeting. However, after the completion of the three-year holding period after the merger, new dual voting rights will be generated.

The proposal will also be submitted to the relevant staff group to perform the notification and consultation process and be subject to customary closing conditions, including the boards final approval of the binding Mou and the final document agreement.

Thanks to a more efficient allocation of large-scale investments in vehicle platforms, powertrain and technology, the deal will also generate a synergistic effect of around 3.7 billion euros per year. The two sides estimate that 80% of the synergies will be realized four years after the merger, and the total one-time cost to achieve the synergies is about 2.8 billion euros.

In the cold winter, the giant huddles to keep warm

In fact, in the face of the continuous downturn in the global automobile market since last year, even the international giants have a hard time.

PSA groups financial report for the third quarter of 2019 shows that the groups auto business unit achieved revenue of 11.824 billion euros, a slight increase of 0.1% compared with the third quarter of 2018. Although it has a profit margin of nearly 9% in Europe, it is still unable to control the decline of sales volume in the global market. PSA group also predicted that the European automobile market will decline by 1% in 2019, and Latin America, China and Russia will decline by 5%, 7% and 2% respectively.

FCAs performance is even worse. Since the merger of Fiat and Chrysler in 2014, FCA has ranked 8th in global sales in 2014, but it is not optimistic in terms of profitability.

It is worth noting that in the North American market, only jeep and RAM are the most popular brands among many FCA models, while the sales situation of Fiat models in North America is not much better than that in China.

At the same time, FCA has been negative. FCA faces a civil fine of $79 million due to its failure to meet U.S. fuel economy requirements in 2017, and a further $40 million fine in September for false sales.

Earlier, former CEO of FCA, Marchionne, was acutely aware of the crisis of FCA and formulated the companys new five-year plan for FCA. He believes that the unsatisfactory revenue is due to the fact that in addition to the profit growth of jeep and Maserati brands within the group, Fiat, Chrysler, dodge and other brands have suffered losses to varying degrees. The long-term debt problem also makes malchanet committed to promoting FCA to seek partners globally.

From GM, VW, Ford, PSA, GAC to Mazda to Renault, in recent years, FCA has been involved in the rumor of acquisition and merger for many times. Although there is no problem, the efforts made by marjorne to seek marriage for FCA always affect this automaker.

Whether its the previous cooperation plan with Renault or this negotiation with PSA, its just to return to the European market with the advantage of partners in Europe.

For PSA, which is eager to return to the US market, FCA is also a good partner. FCAs extensive sales network in the United States is undoubtedly the best reason.

Most importantly, thanks to platform rationalization and investment optimization, the expanded product portfolio will promote both sides to cover all segments with iconic brands and products.

Source: editor in charge of 21st century economic report: Liu Songpeng nbj9949