Fiat Chrysler, Peugeot shareholders approve merger

Shareholders of Fiat Chrysler and PSA Peugeot voted Monday to merge and create the world’s fourth-largest auto company, in a move aimed at addressing an enormous technological shift in the industry.

Addressing separate meetings, PSA Peugeot CEO Carlos Tavares and Fiat Chrysler chairman John Elkann spoke of the “historic” importance of the merger, which combines legacy car companies that helped write the industrial histories of the United States, France and Italy.

Tavares will run the new company, while Elkann stays on as chairman.

Before the merger is finalized, shares in the new company, to be called Stellantis, will be launched. It will be traded in Milan, New York and Paris.

Fiat Chrysler was trading up 2.5% in Milan at 15.03 euros, while Peugeot rose 3.4% in Paris to 23.13 euros.

The new company will have the capacity to produce 8.7 million cars a year, behind Volkswagen, Toyota and Renault-Nissan, and create 5 billion euros in annual savings.

That is higher than the 3.7 billion euros estimated when the deal was announced in December 2019.

The marriage of the Italian-American and French rivals is built on the promise of cost savings in the capital-hungry industry during a technological shift to electrified powertrains and autonomous driving.

But what remains to be seen is if it will be able to preserve jobs and heritage brands in a global market still suffering from the pandemic.

The new company will put together under one roof French mass-market carmakers Peugeot and Citroen, top-selling Jeep and Italian luxury and sports brands Maserati and Alfa Romeo.

While the tie-up is billed as a merger of equals, the power advantage goes to PSA, with Tavares running Stellantis and holding the tie-breaking vote on the 11-seat board.

Tavares is set to take full control of the company early this year, possibly by the end of January.

Fiat Chrysler CEO Mike Manley will head North American operations, which is key to Tavares' long-time goal of getting a U.S. foothold for the French carmaker he has run since 2014, and the clear money-maker for Fiat Chrysler.

Such a deal was long wanted by Fiat Chrysler’s former CEO Sergio Marchionne, who had predicted the need for consolidation in the industry.

He was unable to push through a merger before his sudden death in July 2018.