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Fiat Chrysler, Peugeot get green light for $52 billion automaker

Fiat Chrysler Automobiles (FCA) and PSA said on Monday that investors had given their blessing to a $52 billion merger to form the world’s fourth-largest automaker, and shares in the new company, named Stellantis, would begin trading in two weeks.

With a yearly production of around 8 million vehicles worldwide and earnings of over 165 billion euros ($203 billion), the newly-formed firm is expected to play a major role in the auto industry’s shift into the new era of electrification.

Stellantis is going to have 14 brands, from FCA’s Fiat, Maserati, and U.S.-focused Jeep, Dodge, and Ram to PSA’s traditionally Europe-focused Peugeot, Citroen, Opel, and DS.

FCA and PSA said they expected to finish their tie-up on January 16, ahead of an earlier indication which intended for a closing within the first quarter of this year.

Stellantis shares will begin trading in Milan and Paris on January 18, and in New York the following day, the two automakers said.

At two separate extraordinary shareholder meetings, held virtually earlier on Monday because of the spread of the coronavirus pandemic, investors in each group backed the merger with approval rates above 99% of the votes cast.

“We are ready for this merger,” said Carlos Tavares, the PSA Chief Executive and Stellantis future CEO.

Tavares will have to revive the automakers’ revenues in China, rationalize a sprawling empire, and address massive overcapacity, together with the focus like its rivals on creating cleaner cars.

FCA Chairman John Elkann, the future chairman of Stellantis, said the new automaker would “play a leading role as the next decade redefines mobility”.

FCA CEO Mike Manley – who will head Stellantis’ major North American operations – said 40% of the expected synergies from the merger – projected at over 5 billion euros ($6.15 billion), will come from the convergence of platforms and powertrains and from optimizing R&D investments.

Manley said 35% of synergies would be driven by savings on buyings, while another 7% would come from savings on sales operations and usual expenses.

The rest of the synergies are expected from the optimization of other functions such as logistics, supply chain, quality, and after-market operations, he added.

FCA said in a separate statement it would make the payment of its shareholders, a planned 2.9 billion euro special dividend as soon as possible after the merger has finished.

PSA and FCA have pledged not to shut down any plants.

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