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In the world of Jeep, Dodge, Chrysler, and Ram enthusiasts, the term “merger of equals” triggers anxiety, hinting at the infamous failed union between Chrysler and Mercedes-Benz’s parent company, Daimler, which serves as a lesson on corporate culture clashes.
Surprisingly, just over a decade after the prior unsuccessful “merger of equals,” the unsettling term resurfaces in the recently disclosed documents regarding Fiat Chrysler Automobiles’ impending merger with Groupe PSA, the parent company of Peugeot.
Details extracted from Automotive News reveal that the so-called (dreaded) “merger of equals” is essentially a PSA acquisition of FCA for accounting purposes. This revelation was disclosed in a prospectus submitted by FCA to Euronext Paris and Mercato Telematico Azionario to list shares of the newly formed entity, Stellantis, on these two stock exchanges, with the same filing made to the SEC in the United States.
The prospectus delineates various factors supporting PSA’s acquisition, including PSA’s appointment of six out of 11 Stellantis board members, PSA shareholders’ pre-merger premium payment, and designation of Carlos Tavares, CEO of Groupe PSA, as Stellantis’ inaugural CEO. The initial Stellantis board tenure will span four years, with Tavares helming the CEO role for a five-year term.
Notably, the Agnelli family, the foremost shareholder in FCA presently, will retain the largest stake in Stellantis post-merger at 14.4% of the combined entity, as highlighted by Automotive News. Conversely, the Peugeot family, the French government, and Dongfeng—the second, third, and fourth largest stakeholders—will collectively own 19% of Stellantis.
However, there is a caveat where FCA holds the upper hand. FCA’s Dutch parent company, FCA N.V., will merge with the PSA Group officially and transition to being known as Stellantis N.V.
“In mutual agreement, we have laid down the most effective financial and legal framework for building Stellantis for the future,” stated a PSA declaration cited by Automotive News.
Amidst the acquisition intricacies and the resurrection of *that expression*, apprehensions arise regarding FCA’s position, potentially mirroring pre-FCA Chrysler in the DaimlerChrysler era, as highlighted by Automotive News, emphasizing the non-binding nature of the term “merger of equals.”
The DaimlerChrysler era, remembered unfavorably, showcased Daimler’s dominance over Chrysler, as highlighted in an oral history by Automotive News. The scene where Daimler’s co-CEO defied Chrysler’s no-smoking rule by lighting up in their shared office on day one and unilaterally declaring the space a smoking area vividly encapsulates the prevailing atmosphere.
The era of DaimlerChrysler resulted in cost-saving measures that severely impacted Chrysler, leading to inferior interior materials, elimination of competitive features, and the production of some truly underwhelming vehicles like the Dodge Avenger and the initial Jeep Compass.
Nonetheless, the prospective Stellantis consortium affirms its commitment to a different outcome this time.
“As consistently communicated, Stellantis results from an equal 50:50 amalgamation of FCA and Groupe PSA,” stated an FCA spokesperson, as relayed by Automotive News.
Best of luck to these two unconventional companies. Let’s hope they avoid producing juvenile interiors and outdated four-speed transmissions to buoy the European segment this time.
You can access the complete prospectus on FCA’s website here.
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