FCA in talks with PSA after failed Renault fusion attempt
Fiat Chrysler Automobiles and PSA are in merger discussions which could create the fourth largest automotive group. The two groups themselves, on the other hand, refuse to “comment on market rumors”. However, after the merger with Opel, PSA said it was open to new alliances.
FCA has been in discussions with Renault for quite a while earlier this year. But in June it announced the withdrawal of its 30 billion euros merger offer. FCA accused the French government of having compromised a project that would have given rise to the world’s third-largest manufacturer.
Number 4 worldwide
The merger of FCA and PSA would create the world’s fourth largest in the sector in terms of the number of vehicles sold. Volkswagen, the Renault-Nissan-Mitsubishi alliance, and Toyota form the top-3.
The alliance would allow the French group to return to the American market through the back door. FCA, through the Jeep brands and Dodge RAM pickups, holds significant market shares in the most lucrative segments.
FCA, on the other hand, needs a partner that consolidates its positions in Europe and supports it in Asia. The group, which in Europe manages to survive because of the Fiat 500, saw its market share decline from 6% in 2010 to 4,6% last year. Its range of vehicles has not been sufficiently renewed.
An alliance would also facilitate the transition to electric vehicles.
Exchange of shares
One of the options under discussion would be a merger by exchange of shares. PSA is valued at 22,55 billion euros on the Paris Stock Exchange. FCA is worth 18,42 billion euros on the Milan Stock Exchange. PSA sold 3,9 million vehicles last year, generating revenue of 74 billion euros. FCA sold 4,8 million vehicles, for a 110 billion euros revenue.
PSA Chairman, Carlos Tavares, would become Chief Executive Officer of the new entity. The Board of Directors would be chaired by Fiat Chrysler (FCA) boss, John Elkann, heir to the Agnelli dynasty.
Easier than with Renault
According to Le Figaro, John Elkann reportedly began discussions with PSA in August. But the Italian found the price of the operation too high. He came back to the negotiating table a few days ago.
Still according to Le Figaro, Elkann believes that a merger between FCA and Renault would create much more value. But he understood that the priority was to put the French manufacturer’s Alliance with Nissan in order. On the other hand, Elkann believes that a marriage with PSA would be much easier to achieve.
However, it is not yet guaranteed that an agreement between the two groups will be reached.