Fiat Chrysler Automobiles and Peugeot S.A. (Groupe PSA) have today 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 third-largest by revenue.
The combined company will have annual unit sales of 8.7 million vehicles, with revenues of nearly £145bn, recurring operating profit of over £9.4bn and an operating profit margin of 6.6%, all on a simple aggregated basis of 2018 results.
The combined entity will have a global presence with an iconic brand portfolio covering all key vehicle segments from luxury, premium, and mainstream passenger cars through to SUVs and trucks and light commercial vehicles. This will be underpinned by FCA’s strength in North America and Latin America and Groupe PSA’s solid position in Europe. The new Group will have much greater geographic balance with 46% of revenues derived from Europe and 43% from North America, based on aggregated 2018 figures of each company. The combination will bring the opportunity for the new company to reshape the strategy in other regions.
The merged entity will benefit from an efficient governance structure designed to promote effective performance, with a Board comprised 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.
Completion of the proposed combination is expected to take place in 12-15 months, subject to customary closing conditions.
Carlos Tavares, Chairman of the Managing Board of Groupe PSA, said: “Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services. I have every confidence that with their immense talent and their collaborative mindset, our teams will succeed in delivering maximized performance with vigor and enthusiasm.”
Mike Manley, Chief Executive Officer of FCA, added: “This is a union of two companies with incredible brands and a skilled and dedicated workforce. Both have faced the toughest of times and have emerged as agile, smart, formidable competitors. Our people share a common trait – they see challenges as opportunities to be embraced and the path to making us better at what we do.”