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Fiat Chrysler Merger With PSA Groupe Put On Hold

Written By, Brad R

The seemingly never-ending story for Fiat Chrysler Automobiles (FCA) to find a merger partner continues. The automotive company behind Jeep, Ram, Dodge, Chrysler is still waiting to find their match. In light of the coronavirus outbreak, the French media is reporting that PSA Groupe, the French automotive brand that signed a deal with FCA back in December 2019, has disclosed information that the merger will be altered and possibly negated. The deal that was agreed to included a memorandum of understanding that could close the merger between 12 and 18 months after the agreement date. FCA’s headquarters are in Italy, where some of the worst of the outbreak has taken place, but both sides are working together in France and Italy to sort through operational details. Documents have been submitted to antitrust authorities, however, the outbreak has slowed down the process. This is the second company in less than two years FCA has tried to merge with but has been unsuccessful in keeping this plan afloat. 

The Future For Fiat Chrysler

What does this mean for FCA? The deal that was signed back in December 2019 called for FCA shareholders to receive a unique dividends of €5.5 billion, which amounts to $6.1 billion, and PC group shareholders would receive the automaker’s 46% share of Faurecia, The French supplier included in the deal. The crisis has reduced the value of this company and proposed dividends have become a sensitive topic. Automakers are looking to save cash in order to work through this global crisis. auto majors might need government-backed loans to hold off expenses The longer this virus closes off business. The result of this merger not being able to follow through is simply due to resistance of economic fallout and each brand focusing on their market capital. The financial terms of the merger was equal by both sides, but will at least be reviewed with all the evidence that has mounted regarding those close to the situation. Sources from the Paris-based Agence France-Presse news agency broke the story.

What's At Stake With This Merger?

Both companies were looking forward to becoming the fourth-largest automotive company in the world. Fiat Chrysler was hoping to gain the help of PSA Groupe to expand their EV platform and gain better recognition in Europe, while expanding brand recognition globally. This plan is now on hold as the details are still fluid regarding if this deal is on hold or simply not going to happen altogether. While FCA has not spoken out about this report, PSA Groupe has and they would have to give as much as 500 million euros to Fiat Chrysler should the deal not be completed and another 250 million euros if the PSA Groupe board does not have a vote at a shareholders meeting by March 31, 2021. 

"It is inappropriate to be speculating about modifications of the deal conditions. We are completely focused on protecting our employees and our company. We are taking the necessary decisions to ensure group sustainability. More than ever, this merger makes sense. Our teams continue to work with the same commitment." PSA Groupe announced. 

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