It's official ladies and gentlemen, its official. Peugeot and Fiat Chrysler have done a 50-50 merger, becoming the 4th largest automobile manufacturer behind Toyota, Nissan-Renault, and Volkswagen.
PSA CEO Carlo Tavares will lead the new group. It has not yet been decided what position FCA CEO Mike Manley will have. FCA Chairman John Elkann will be the chairman of the new company, which has yet to be named.
PSA will most likely have the upper hand in day-to-day things, as they will have one extra seat on the board, and their CEO took over. The new group can have a combined revenue of nearly $190 billion, and can be expected to produce about 9 million cars a year. We can expect the deal to take 12-15 month to close.
The company will save a lot of money by doing this, almost $4 billion. To do this, they will share platforms, and they will not have to close down any manufacturing plants. The merged company will be based in the Netherlands, which is interesting considering the French government owns a 12% stake in PSA.
Both companies aim to improve, which is a good thing, especially for FCA. Hopefully, their quality will improve. For the time being, they will focus on big improvements in China, where both companies are significantly behind the competition. They will hopefully improve in markets where they are successful, such as Latin America for Fiat and Europe for Peugeot.
Chinese investor in PSA, Dongfeng will lose a 1.7% share, going from 6.2% to 4.5%.
FCA will be forced to pay shareholders a hefty sum of $6.1 billion, which makes me wonder about debt.
Hopefully both companies will prosper because of this deal, so we can see the return of great FCA products, instead of ones that suffer from terrible quality issues.