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Fiat Chrysler shares get a boost after revised Stellantis merger deal with PSA

MILAN — Shares in Fiat Chrysler (FCA) rose sharply in Milan on Tuesday after the car maker and French partner PSA revised the terms of their merger deal, with FCA's shareholders getting a smaller cash payout but a stake in another business. FCA and PSA, which last year agreed to merge to give birth to Stellantis, the world's fourth largest car manufacturer, said late on Monday they had amended the accord to conserve cash and better face the COVID-19 challenge to the auto sector. Milan-listed shares in Fiat Chrysler rose almost 8% by 1000 GMT, while PSA gained 1.5%. Under the revised terms, FCA will cut from 5.5 billion euros ($6.5 billion) to 2.9 billion euros the cash portion of a special dividend its shareholders are set to receive on conclusion of the merger. However, PSA will for its part delay the planned spinoff of its 46% stake in car parts maker Faurecia until after the deal is finalized. That means all Stellantis shareholders — and not just the current PSA investors - will get shares in a company which has a market value of 5.8 billion euros. Based on Stellantis' 50-50 ownership structure, FCA and PSA respective shareholders will each receive a 23% stake in Faurecia. Analysts welcomed the 2.6 billion euros in additional liquidity for Stellantis' balance sheet as well as the increase in projected synergies to more than 5 billion euros from 3.7 billion. There was also further reassurance as the two companies confirmed they expected the deal to close by the end of the first quarter of 2021. "All told, the two players emerge as winners," broker ODDO BHF said in a note. "Of the two, FCA might be a bit more of a winner in the short term given the structure of the deal and the numerous payouts to shareholders to come in the quarters ahead (potentially close to 5 billion euros versus the current capitalization of around 16 billion euros)." The special dividend for FCA shareholders had proved contentious after Italy offered state guarantees for a 6.3 billion euro loan to the company's Italian business. "These announcements should, at last, end the debate over the financial terms of the merger, which had become a big topic and was still penalizing the two groups' share performances," ODDO BHF said. PSA and FCA said they would consider paying out 500 million euros to shareholders in each firm before closing or else a 1 billion euro payout to Stellantis shareholders afterwards, depending on market conditions and company performance and outlook.

Germany threatens to ban FCA vehicles over diesel emissions dispute

Germany is threatening to ban sales of FCA products over diesel emissions. According to the newspaper Bild Am Sonntag, Germany's Federal Motor Transport Authority found evidence of a so-called defeat device that shuts down certain emissions controls after running for 22 minutes. A standard diesel emissions test in the European Union reportedly takes 20 minutes to complete. FCA denies the allegations. "We believe all our vehicles respect EU emissions standards and we believe Italian regulators are the competent authority to evaluate this," the company said in a statement. The latter part of that statement drew ire from German authorities, especially after FCA declined to meet with German transport minister Alexander Dobrindt to discuss the issue. Graziano Delrio, the Italian Minister of Infrastructure and Transport, vowed to work with German authorities on behalf of FCA. According to EU law, FCA is required to homologate its vehicles in Italy because that's where its regional operations are based. When will the diesel-scented soap opera end? We wish we knew, but our Magic 8 Ball is covered in soot. Related Video: News Source: Financial TimesImage Credit: Giuseppe Aresu/Bloomberg via Getty Government/Legal Green Chrysler Dodge Fiat Jeep RAM Emissions Diesel Vehicles FCA

Dongfeng and PSA extend Chinese joint venture

BEIJING/PARIS — China's Dongfeng and Peugeot maker PSA are extending their business cooperation, despite the Chinese company reducing its stake in PSA to help smooth the French carmaker's merger with Fiat Chrysler Automobiles (FCA). Dongfeng said on Thursday it had agreed with PSA to extend the duration of their joint venture Dongfeng Peugeot Citroen Automobiles (DPCA). Under the deal, the venture could get the rights to PSA's new brands in China and will benefit from new technologies and intellectual properties, the Chinese company said. PSA was not immediately available for comment. The announcement comes a day after the companies said Dongfeng would reduce its 12.2% stake in PSA by selling 30.7 million shares to the French company. Analysts said the move could smooth U.S. regulatory approval for PSA's roughly $50 billion (GBP38.97 billion) merger with Italian-American carmaker FCA. The sale of Dongfeng's shares in PSA, worth around 680 million euros ($757 million), will leave the Chinese group holding around 4.5% of the merged PSA-FCA, which is set to become the world's fourth-biggest carmaker by sales volumes. "As the cooperation between Dongfeng and PSA deepens, we expect the joint venture to continue making good progress in China," a Dongfeng representative said. On a conference call, Dongfeng said DPCA would have exclusive rights to PSA's Opel cars should the partners agree to bring the brand to China, and enjoy lower prices on car parts imported from PSA. Earlier this year, a document seen by Reuters showed Dongfeng and PSA plan to cut jobs at Wuhan-based DPCA and reduce its number of car plants to try to make the venture more profitable. Chrysler Dodge Fiat Jeep RAM Citroen Peugeot China FCA PSA Dongfeng