Fiat Chrysler Automobiles NV and PSA Group amended the terms of their merger to form one of the world’s largest car manufacturers so that the combined company emerges from the coronavirus pandemic on better financial footing.
The special dividend paid out to Fiat Chrysler shareholders will be reduced to 2.9 billion euros ($3.4 billion), while PSA’s stake in French auto-parts supplier Faurecia SE will be put off until after the carmakers combine, according to a statement Monday. The joint entity, named Stellantis, will have 2.6 billion euros more cash as a result of the changes.
Tweaking the terms of the dividend is a setback for the Agnelli family that controls Fiat Chrysler, which is led by Chairman John Elkann. But some PSA shareholders had criticized it as being too rich given the companies’ relative performance since the emergence of Covid-19.
Under the initial terms of the deal, PSA was going to distribute its 46% stake in Faurecia to its investors before the merger, partly to compensate for Fiat Chrysler shareholders receiving a 5.5 billion-euro dividend. Now, PSA and Fiat Chrysler holders will each be distributed stakes in Faurecia worth about 1.36 billion euros.
PSA Chief Executive Officer Carlos Tavares told Bloomberg Television in July that the two companies would finalize the terms of their combination based on an assessment of their cash position toward the end of this year. His counterpart at Fiat Chrysler, CEO Mike Manley, told reporters last week that the deal is on track for the first quarter of next year.
–By Daniele Lepido (Bloomberg)
