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January 4, 2021 12:45 PM, EST

PSA, Fiat to Seal Merger After Winning Shareholder Approval

Fiat Chrysler Automobiles and PSA Group will combine to form a new company called Stellantis.Fiat Chrysler Automobiles and PSA Group will combine to form a new company called Stellantis. (Christopher Pike/Bloomberg News)

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Fiat Chrysler Automobiles NV and PSA Group will complete their combination later this month after shareholders signed off on a deal that endured two years of drama.

The merged company called Stellantis will become the world’s fourth-largest automaker on Jan. 16, then start trading two days later in Milan and Paris and the following day in New York, according to a statement Jan. 4.

The hurdles to finish the tie-up well ahead of the target for the end of this quarter were plentiful and prodigious, with Fiat even managing to patch things up after a short-lived attempt to join forces with PSA’s archrival Renault SA.

Fiat Chrysler and PSA executives reckon they’ll boost returns with scale more closely resembling Volkswagen AG and Toyota Motor Corp., and have greater resources to compete with electric-car upstarts and tech-industry interlopers. But plenty of challenges await once the deal is done. Stellantis will be an amalgam of model lines with enviable positions in certain segments, but neither company has much of a foothold in the luxury-car business or China’s vast auto market.

“Stellantis will be a sort of conglomerate of brands, some great and some not so good and most very regional,” said Jefferies analyst Philippe Houchois. “The merger will be a good opportunity for a reset.”

PSA CEO Carlos Tavares will take charge as CEO of Stellantis once the merger is complete. (Marlene Awaad/Bloomberg News)

PSA CEO Carlos Tavares will become CEO of Stellantis once the merger is complete. (Marlene Awaad/Bloomberg News)

Strengths, Weaknesses

The combined company will boast an impressive presence in North America’s lucrative truck and SUV segments, thanks to Fiat Chrysler’s Ram and Jeep divisions. PSA’s revitalized Peugeot and Citroen brands have meanwhile excelled in Europe and are the envy of its turnaround-minded French foe, Renault.

But both also have their weaknesses. The merger of Fiat with Chrysler did little to improve the fortunes of the Alfa Romeo and Maserati luxury lines, while PSA’s purchase of Opel only made the company more reliant on Europe’s crowded and shrinking market.

Shares of Peugeot and Fiat Chrysler advanced 1.7% and 1.5%, respectively, in Paris and Milan trading, giving the companies a combined market value of about $53.6 billion.

The job of shaking up Stellantis’ portfolio will fall to PSA CEO Carlos Tavares, an ultra-competitive amateur rally driver who calls himself a “performance psychopath.” He takes a Darwinian view on the industry, arguing that only the strong carmakers will survive the pivot to electric drivetrains and pursuit of autonomous driving.

“We are ready for this merger,” Tavares told PSA shareholders, adding that the new company will have an extraordinary collection of brands.

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