The news just broke at The Wall Street Journal:
Peugeot maker PSA Group and rival Fiat Chrysler Automobiles have agreed to a binding merger agreement that includes sweeteners to make the trans-Atlantic tie-up more attractive to U.S. regulators and PSA shareholders, the companies said Wednesday.The Wall Street Journal
The two boards voted to sign a memorandum of understanding, fixing the financial terms of the deal and the corporate-governance structure of the combined company. The move marks an important step in solidifying a merger that was announced in October. The tie-up aims to create a $50 billion auto giant that would rank among the world’s largest car companies by sales.The Wall Street Journal
The two legacy auto companies will merge for a bigger, more spectacular failure.
The deal comes at a time of mounting cost pressures in the global car business, with auto companies investing billions in new technologies, such as electric cars, as demand for cars and trucks in the top auto markets weakens.The Wall Street Journal
Oh yeah, that whole electrification thing… hopefully that’s just a fad though.
Dongfeng’s decision to reduce its stake in PSA is designed to help the deal gain approval from the Committee on Foreign Investment in the U.S., which is likely to review the merger proposal at a time of trade tensions between the U.S. and China, the people said. Dongfeng would end up with a roughly 4.5% stake in the newly combined auto company and won’t be entitled to a board seat, they said.The Wall Street Journal
So, the merger is conditional on CFIUS and the Trump administration accepting a Chinese car company owning 5% of one of America’s Big 3 Auto giants. Good luck with that.
Both Fiat Chrysler and PSA shareholders must approve the deal through a vote, likely to occur next fall.The Wall Street Journal
Hopefully they’re still around by next fall.
If completed, the merger will create the world’s fourth-largest auto maker by number of vehicles sold, uniting the owner of brands such as Dodge, Ram, Jeep and Alfa Romeo with a stable of brands that includes Peugeot, Citroën, Opel and Vauxhall. The new company will produce almost as many cars in Europe as Volkswagen AG , the continent’s largest car maker, and will have a large presence in the U.S. and South America.
The two car makers previously said that John Elkann, Fiat Chrysler’s chairman, will become chairman of the newly merged company, while PSA Chief Executive Mr. Tavares will be CEO with an initial five-year term.The Wall Street Journal
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