PSA and FCA hope to merge to meet the current dual challenges faced by the auto industry, namely, obtaining funds for the transformation of the new four modernizations, and responding to the impact of the epidemic on the auto market.
On December 21, local time, Fiat Chrysler Automobiles Group (FCA) and PSA Peugeot Citroen Group (PSA) were approved by the EU antitrust agency. The two parties will merge for US$38 billion to create the world's fourth largest automaker.
The European Commission stated that PSA will extend the minivan agreement signed with Toyota to increase production capacity for Toyota and reduce the transfer price of vehicles, parts and accessories, thereby addressing EU antitrust concerns. This also confirms previous reports by foreign media that PSA intends to increase Toyota's production in response to EU antitrust organizations blocking its merger plan with FCA.
The EU Competition Commission Margrethe Vestager reminded in a statement on Monday that the entry of small commercial trucks into a highly competitive market is important for many self-employed and small and medium-sized enterprises in Europe. According to the agency, Fiat and PSA Peugeot Citroen will also allow competitors to use their truck repair and maintenance networks to help new entrants expand the market.
In June of this year, the European Commission launched an investigation into the merger of PSA and Fiat Chrysler Group, on the grounds that the transaction may disrupt the order of competition in the 14 European Union countries and the British auto market. In fact, a market share of more than 30% means that the company has a monopoly, but it does not mean that a monopoly is formed in the true sense. According to data released by the European Automobile Manufacturers Association, PSA and FCA produced a total of 755,000 light commercial vehicles in 2019, with a market share of about 34% in Europe.
Generally speaking, for those companies that are about to be acquired or merged, the EU will require both parties to directly sell overlapping businesses to prevent a certain business after the merger from becoming too strong. The intended merger of Siemens and Alstom in early 2019 could not be reached. It is also the result of EU intervention.
In fact, PSA and FCA hope to merge to meet the current dual challenges facing the automotive industry, namely, obtaining funds for the transformation of the new four modernizations, and responding to the impact of the epidemic on the auto market.
The EU antitrust organization approved the merger application this time, which means that both parties have overcome the biggest obstacle to merger. In December last year, FCA and PSA signed a joint agreement that the two companies intend to achieve a complete merger of the two companies with a 50:50 share ratio. In July this year, FCA and PSA decided to name the new group "Stellantis" after negotiation. The group will own 13 car brands including Citroen, DS, Peugeot, Jeep, Vauxhall, Maserati and Alfa Romeo.
On Monday, the two companies said: “FCA and Group PSA warmly welcome the European Commission’s approval of the merger, and will work to create a new global leader in the mobile sector, Stellattis.” Shareholders of both parties will hold separate meetings on January 4 to approve the transaction. The merger is expected It will be completed by the end of the first quarter of 2021.