FCA, PSA revise merger terms due to COVID-19; special dividend reduced

PARIS — PSA Group and Fiat Chrysler Automobiles on Monday said they revised the terms of their planned merger, adding PSA would hold onto its stake in parts supplier Faurecia and FCA would cut the cash portion of a 5.5 billion euro ($6.5 billion) special dividend.

Once combined, the new company will be called Stellantis.

“With this new decisive milestone, we are moving all together towards our goal in the best possible condition with even greater prospects for Stellantis,” PSA CEO Carlos Tavares said in a statement. “I would like to take this opportunity to warmly thank the teams who have built reciprocal relations of trust, including during the COVID-19 confinement.”

FCA will cut to 2.9 billion euros ($3.44 billion) the cash portion of a special dividend its shareholders are set to receive under the terms of the merger accord, the statement said.

France’s PSA, in turn, will scrap the spin-off of its 46 percent stake in Faurecia. The supplier will be capitalized at 5.9 billion euros ($7 billion), the companies said

FCA CEO Mike Manley said in the statement: “Today’s announcement is a further, strong signal of a common determination to ensure that Stellantis has all the resources it needs to apply its unique assets, its creative energies and many opportunities to the creation of superior value for all our stakeholders.”

FCA and PSA said annual estimated synergies from their merger were now seen over 5 billion euros, compared with an initial estimate of over 3.7 billion euros.

The two carmakers confirmed that they expected to complete their tie-up process by the end of first quarter of next year.

Faurecia, which makes a wide variety of interiors and other parts for automakers, ranks No. 8 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $19.9 billion in 2019.

Reuters and Automotive News contributed to this report.

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