PSA CEO Carlos Tavares is sure that a $50 billion merger of the owner of Peugeot vehicles with Fiat Chrysler Automobiles (FCA) will proceed as planned and deliver synergies of no less than 3.7 billion euros ($4.2 billion).
The deal to form the world’s fourth-largest automaker has become even more important because of the impact of the coronavirus crisis and to accelerate cost savings, Tavares informed PSA’s annual shareholder meeting on Thursday.
“The merger with FCA is the best among the solutions to cope with the crisis and its uncertainties.”
Global automobile sales have dropped as measures to contain the coronavirus pandemic forced production lines and showrooms to shut down, with carmakers scrambling to save cash in the industry’s worst crisis since the 2008-09 financial crisis.
The CEO also played down fresh European Union antitrust scrutiny of the planned merger, adding that he was sure that it would be finalized in the first quarter of the next year “at the latest”.
“The timetable of the merger with FCA is being strictly respected,” he said, adding that projected synergies of 3.7 billion euros from the deal were a “floor”.
EU antitrust regulators this month started a four-month investigation into the deal, saying it may harm competition in small vans in 14 EU nations and the UK.
The two automakers refused to offer concessions to allay EU concerns during its preliminary review of the deal, which has already got the green light in the United States, China, Japan, and Russia.
Tavares said the “time has not come to discuss this issue” when asked if terms could be revised to reflect the downturn in the global auto industry, adding that the benefits of the deal must be appreciated over the long term and PSA was concentrated on the binding agreement with FCA.
PSA and FCA have however already modified one aspect of the merger. In May, they stated that they would not pay their planned ordinary dividend on 2019 results, mentioning the negative impact of the coronavirus pandemic.
A 1.1 billion euro ordinary dividend for both FCA and PSA was declared in December as part of their agreement.
