This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2019/10/31/business/fiat-chrysler-psa-peugeot-merger.html

The article has changed 5 times. There is an RSS feed of changes available.

Version 1 Version 2
Fiat Chrysler and PSA, Maker of Peugeot, to Merge Fiat Chrysler and PSA, Maker of Peugeot, to Merge
(32 minutes later)
Fiat Chrysler and PSA of France announced on Thursday that they plan to merge, a combination that would create Europe’s largest carmaker and the fourth largest in the world.Fiat Chrysler and PSA of France announced on Thursday that they plan to merge, a combination that would create Europe’s largest carmaker and the fourth largest in the world.
The announcement came after a round of board meetings on Wednesday that endorsed what the companies described as “intensive” discussions among their senior managers. The two automakers described the transaction as a way to share the enormous cost of an industrywide transition to electric and autonomous vehicles.The announcement came after a round of board meetings on Wednesday that endorsed what the companies described as “intensive” discussions among their senior managers. The two automakers described the transaction as a way to share the enormous cost of an industrywide transition to electric and autonomous vehicles.
With combined annual sales of 8.7 million vehicles and 170 billion euros, or $190 billion, the new entity would be slightly larger than General Motors in terms of cars produced, and well ahead of Ford Motor Co.With combined annual sales of 8.7 million vehicles and 170 billion euros, or $190 billion, the new entity would be slightly larger than General Motors in terms of cars produced, and well ahead of Ford Motor Co.
But Fiat Chrysler and PSA will still have considerable weaknesses. Both lack a strong presence in China, and they are behind rivals like Renault or Volkswagen in developing electric vehicles.But Fiat Chrysler and PSA will still have considerable weaknesses. Both lack a strong presence in China, and they are behind rivals like Renault or Volkswagen in developing electric vehicles.
In Europe, Fiat and PSA, with its Peugeot and Citroën brands, will surpass Volkswagen to become market leaders. They also have a strong lineup of SUVs, which are increasingly popular with European buyers.In Europe, Fiat and PSA, with its Peugeot and Citroën brands, will surpass Volkswagen to become market leaders. They also have a strong lineup of SUVs, which are increasingly popular with European buyers.
Overall, though, the European market has been in a long-term decline.Overall, though, the European market has been in a long-term decline.
“Both groups would control Europe’s fastest growing segment and the source of profits,” said Felipe Munoz, senior analyst at Jato Dynamics. “However,” he said in an email, “both companies lag behind rivals in terms of electrification.”“Both groups would control Europe’s fastest growing segment and the source of profits,” said Felipe Munoz, senior analyst at Jato Dynamics. “However,” he said in an email, “both companies lag behind rivals in terms of electrification.”
Carlos Tavares, the chief of PSA, will be the chief executive of the new company. Mr. Tavares, described by people who have met him as charming but tough, has already expanded PSA’s presence in Europe by acquiring Opel from G.M. in 2017.Carlos Tavares, the chief of PSA, will be the chief executive of the new company. Mr. Tavares, described by people who have met him as charming but tough, has already expanded PSA’s presence in Europe by acquiring Opel from G.M. in 2017.
John Elkann, the chairman of Fiat Chrysler, will be the chairman of the new company. Mr. Elkann is a scion of Italy’s powerful Agnelli family, which has long controlled Fiat.John Elkann, the chairman of Fiat Chrysler, will be the chairman of the new company. Mr. Elkann is a scion of Italy’s powerful Agnelli family, which has long controlled Fiat.
The merger will be accomplished by exchanging shares, with each company contributing 50 percent of the new entity. Shareholders of Fiat Chrysler will receive a special dividend of 5.5 billion euros.The merger will be accomplished by exchanging shares, with each company contributing 50 percent of the new entity. Shareholders of Fiat Chrysler will receive a special dividend of 5.5 billion euros.
News of that dividend was reflected in how investors in the two companies reacted to Thursday’s news. Fiat Chrysler shares jumped by about 10 percent, while PSA’s fell by more than 9 percent.
Fiat Chrysler and PSA will each nominate five members to the new company’s board. The chief executive, Mr. Tavares, will hold the 11th seat on the board.
An attempt by Fiat Chrysler to merge with Renault earlier this year foundered in part because of meddling by the French government. But the French finance minister, Bruno LeMaire, said Thursday that he “favorably welcomed” the deal between Fiat Chrysler and PSA.An attempt by Fiat Chrysler to merge with Renault earlier this year foundered in part because of meddling by the French government. But the French finance minister, Bruno LeMaire, said Thursday that he “favorably welcomed” the deal between Fiat Chrysler and PSA.
However, the French government, long an influential shareholder in PSA, said it would be “vigilant” about ensuring the group retained a significant industrial presence in France, as well as sway over decision making. The government will also seek a commitment from the new merged company to be involved in a European effort to create an industry for electric car batteries, Mr. LeMaire said.However, the French government, long an influential shareholder in PSA, said it would be “vigilant” about ensuring the group retained a significant industrial presence in France, as well as sway over decision making. The government will also seek a commitment from the new merged company to be involved in a European effort to create an industry for electric car batteries, Mr. LeMaire said.
The companies said Thursday that, together, they can save 3.7 billion euros a year by sharing the cost of new technologies. They said they can do so without closing any factories.
French unions had been wary that Fiat’s previous effort to merge with Renault could result in plant closures, and had pressured the government to press Fiat to preserve jobs. The government, which will remain a shareholder, is likely to take an active role in trying to prevent any layoffs in France from the new deal.
Most unions leaders at PSA welcomed the merger, saying it would let the automaker compete with giants like Volkswagen and Toyota and possibly create more jobs after a decade of cuts. PSA shed more than 3,200 employees in France last year and has a French work force of 64,560 compared to 100,000 ten years ago.Most unions leaders at PSA welcomed the merger, saying it would let the automaker compete with giants like Volkswagen and Toyota and possibly create more jobs after a decade of cuts. PSA shed more than 3,200 employees in France last year and has a French work force of 64,560 compared to 100,000 ten years ago.
Only the militant CGT union expressed mistrust. “We are concerned that this merger will result in further losses,” said Jérôme Boussard, a CGT representative at the automaker.Only the militant CGT union expressed mistrust. “We are concerned that this merger will result in further losses,” said Jérôme Boussard, a CGT representative at the automaker.