The French Minister of Economy and Finance, Bruno Le Maire, on Thursday approved the merger project between the French car manufacturer PSA (Opel, Peugeot, Citroën and DS) and the American-American Fiat Chrysler Automobiles (FCA) , which in his opinion responds to the needs of the sector.
“This operation responds to the need of the automobile sector to consolidate itself to face the challenges of future mobility. It will allow the creation of the fourth global automobile group” he said in a statement.
Le Maire reiterates that the French State, which owns 12% of the shareholders of the French group through the BPI, will ensure that the negotiations do not affect its industrial implementation and the project to create a European subsidiary of electric batteries.
This new merger plan comes after Fiat presented an offer a few months ago to combine with PSA’s rival, Renault, which failed due to lack of support from the French government and its Nissan partner.
“France must be proud of its car industry, which has demonstrated its capacity for research and technological innovation, particularly in electrical and hybrid matters,” added Le Maire.
The minister recalled that this operation leads to the creation of the fourth global automobile group. The proposed merger would create the 4th largest global car manufacturer in terms of units sold ( 8.7 million vehicles ), with combined revenues of almost 170,000 million euros and recurring operating profits of more than 11,000 million euros on an aggregate basis. simple of the results of 2018, excluding Magneti Marelli and Faurecia. The estimate is that 80% of the synergies would be achieved after 4 years, and the cost to achieve them is estimated at 2.8 billion euros .
The new company will be domiciled in the Netherlands and will be listed on the Euronext Paris Stock Exchange, the Italian Stock Exchange (Milan) and the New York Stock Exchange, and would continue to maintain significant presences at the current headquarters in France, Italy and the United States.
The company resulting from the merger would take into account the highest margins in the markets where it would operate, based on the strength of FCA in the United States (a place longed for by PSA for years) and Latin America, and of Groupe PSA in Europe. The adaptation of projected annual synergies, estimated at approximately 3.7 billion euros, will also be interesting in this merger, without having to face plant closures as a result of the transaction.
The new group, he added, would have “a full range”, from utility cars to high-end cars, and PSA and FCA would reach “the size necessary to make the necessary investments to meet the challenges of energy transition, electrification and shared, autonomous and connected driving.”
Elkann president, Tavares CEO
In the new company, under a Dutch parent company, the president would be John Elkann (current president of FCA) and the CEO Carlos Tavares (current president of PSA), of whom Le Maire praised the work undertaken in front of PSA.
For Tavares “this convergence brings significant value to all interested parties and opens a bright future for the Company resulting from the merger. I am satisfied with the work done so far with Mike (Manley, CEO and FCA) and I will be very happy to work with him to build a great company together.”
For its part, the architect of the negotiation by FCA, Mike Manley , has stood out being “delighted by the opportunity to work with Carlos and his team in this merger that can potentially change the sector. We have a long history of successful cooperation with Groupe PSA, and I am convinced that together with our people we can create a world-class global mobility Company.”