Fiat, PSA to win EU approval for $38 billion merger: sources

By Foo Yun Chee and Giulio Piovaccari BRUSSELS/MILAN (Reuters) - Fiat Chrysler and PSA are set to win EU approval for their $38 billion merger to create the world's No.4 carmaker, people close to the matter said, as they strive to meet the industry's dual challenges of funding cleaner vehicles and the global pandemic. The green light from the European Commission would formalise the creation of Stellantis, a carmaking group that could tap hefty profits from selling Ram pickup trucks and Jeep SUVs to U.S

Reuters October 27, 2020 00:05:46 IST
Fiat, PSA to win EU approval for $38 billion merger: sources

Fiat PSA to win EU approval for 38 billion merger sources

By Foo Yun Chee and Giulio Piovaccari

BRUSSELS/MILAN (Reuters) - Fiat Chrysler and PSA are set to win EU approval for their $38 billion merger to create the world's No.4 carmaker, people close to the matter said, as they strive to meet the industry's dual challenges of funding cleaner vehicles and the global pandemic.

The green light from the European Commission would formalise the creation of Stellantis, a carmaking group that could tap hefty profits from selling Ram pickup trucks and Jeep SUVs to U.S. drivers to fund the expensive development of zero-emission vehicles for sale in Europe and China.

The all-share merger announced late last year would unite brands such as Fiat, Jeep, Dodge, Ram and Maserati with the likes of Peugeot, Opel and DS - while targeting annual cost cuts of 5 billion euros ($6 billion) without closing factories.

The Commission and Italian-American group Fiat Chrysler Automobiles (FCA) declined to comment. France's PSA did not immediately respond to a request for comment.

PSA and FCA shares reversed losses after the Reuters story was published. PSA stock was last up 3.4% at 17.06 euros, while FCA shares were 3% higher at 11.43 euros.

To allay EU antitrust concerns, PSA has offered to strengthen Japanese rival Toyota Motor Corp, with which it has a van joint venture, by ramping up production and selling it vans at close to cost price, the people said.

FCA and PSA will also allow their dealers in certain cities to repair rival brands.

Following feedback from rivals and customers, the carmakers only had to tweak the wording of their concessions, with no changes to the substance, the people said.

The companies did not have to use the COVID-19 pandemic to argue for the merger, they said, adding the EU decision could come by the end of the year, ahead of the official Feb. 2 deadline.

FCA and PSA have said they hope to complete the merger in the first quarter of 2021.

The challenge of switching to electric cars has been complicated by the COVID-19 pandemic.

Just last month, FCA and PSA restructured the terms of their deal to conserve cash and raised their targeted cost savings because of the economic fallout from the health crisis.

The companies have said about 40% of the savings will come from product-related expenses, 40% from purchasing and 20% from other areas, such as marketing, IT and logistics.

(1 euro = $1.1859)

(Reporting by Foo Yun Chee in Brussels and Giulio Piovaccari in Milan, additional reporting by Gilles Guillaume in Paris, writing by Nick Carey; editing by Jason Neely and Mark Potter)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Facebook releases first data on hate speech prevalence on its platform
News & Analysis

Facebook releases first data on hate speech prevalence on its platform

By Elizabeth Culliford (Reuters) - Facebook Inc for the first time on Thursday disclosed numbers on the prevalence of hate speech on its platform, saying that out of every 10,000 content views in the third quarter, 10 to 11 included hate speech. The world's largest social media company, under scrutiny over its policing of abuses, particularly around November's U.S.

Santa, barred from malls and chimneys, enters homes via interactive video
News & Analysis

Santa, barred from malls and chimneys, enters homes via interactive video

(Reuters) - Santa cannot sit with kids in shopping malls this year, but they can still tell him their Christmas wishlist in a video chat at home.     Technology company Storyfile has come up with an artificial intelligence alternative to the holiday tradition: an interactive website where Father Christmas answers questions as if in person

Facebook estimates hate speech seen in 1 out of 1000 views on its platform
News & Analysis

Facebook estimates hate speech seen in 1 out of 1000 views on its platform

By Elizabeth Culliford (Reuters) - Facebook Inc for the first time on Thursday disclosed numbers on the prevalence of hate speech on its platform, saying that out of every 10,000 content views in the third quarter, 10 to 11 included hate speech. The world's largest social media company, under scrutiny over its policing of abuses, particularly around November's U.S.