After four months of discussions, monetary aid from the Italian government, and multiple cost cuts, a merger is finally happening.
According to people close to the matter, Fiat Chrysler and PSA are on their way to win approval for their $38 billion merger. When the deal goes through, the world's fourth-largest carmaker will be created.
Under the all-share merger, brands like Fiat Jeep, Dodge Maserati, and Ram will be under the same roof as Opel and DS. The European Commission’s approval would allow the creation of Stellantis. This group is looking to make a profit from selling Ram pickup trucks and Jeep SUVs to fund the manufacturing and production processes of zero-emission vehicles that will hit the European and Asian markets.
However, the switch to electric cars became more difficult than usual, given the current global context. Last month, FCA and PSA revised the merger's terms to preserve cash and raised the targeted cost savings due to the pandemic-induced economic fallout. According to them, 40% of the savings will come from purchases, 40% will be from product-related expenses, while the rest will come from areas like logistics, IT, and marketing.
Following the news, FCA stock price gained 0.61%. During the European session, PSA lost more than 1%.
Sources: investing.com, finance.yahoo.com