Fiat Chrysler Automobiles (FCA) and Peugeot S.A. (Groupe PSA) have signed a binding Combination Agreement providing for a 50-50 merger of their businesses to create the fourth largest global automotive OEM by volume and the third largest by revenue. The combined company will have annual unit sales of 8.7 million vehicles and combined revenues of nearly 170 billion Euros.
The efficiencies that will be gained from optimizing investments in vehicle platforms, engine families and new technologies while leveraging increased scale will enable the business to enhance its purchasing performance and create additional value for stakeholders. More than two- thirds of run rate volumes will be concentrated on 2 platforms, with approximately 3 million cars per year on each of the small platform and the compact/mid-size platform.
The combined entity will include a Board comprising of 11 members, the majority of whom will be independent. Five Board members will be nominated by FCA and its reference shareholder (including John Elkann as Chairman) and five will be nominated by Groupe PSA and its reference shareholders (including the Senior Non-Executive Director and the Vice Chairman). At closing, the Board will include two members representing FCA and Groupe PSA employees. Carlos Tavares will be Chief Executive Officer for an initial term of five years and will also be a member of the Board. The new group’s Dutch-domiciled parent company will be listed on Euronext (Paris), the Borsa Italiana (Milan) and the New York Stock Exchange.
Completion of the proposed combination is expected to take place in 12-15 months, subject to customary closing conditions, including approval by both companies’ shareholders at their respective Extraordinary General Meetings and the satisfaction of antitrust and other regulatory requirements.
