PSA-Fiat Chrysler, Recent, Billion Dollar Deal
PSA, French multinational manufacturer of automobiles and motorcycles, and Fiat Chrysler, Italian American Company, announced a new, breakthrough deal with one another, 6 weeks ago. Both giants are going for an ‘all share merger’ through a $50 billion deal.
The deal is massive and through this
huge, big deal, well-known names in the automobile industry are coming
together. These include Fiat, Jeep, Dodge, Ram and Maserati, DS, Opel and
Peugeot.
The move by Fiat Chrysler and PSA shows a binding
agreement and a merger that will change the Global Car Industry forever.
Clear
Insights On The Deal
The aim of the two manufacturers coming together is an
effort to cut major costs and come under one roof.
Their aim is to cut costs by $4.1 billion per year
without essentially closing factories.
At the moment,
recession is evident and 2020 just started. The two manufacturers have come
together to help with the efforts of the automotive industry. While the year might
be tough, a big merger such as this one will impact things positively.
The Deal And Outcomes
The PSA/Fiat Chrysler is a massive deal that shows
collateral bi-leadership. The essence and key of it is to understand that with the
merger of these two companies, something huge is coming to the table. Both
companies are together to boost the purpose of a solidified automotive
industry. It is being said that within few weeks of its instance, things will
materialize and start falling into place soon.
What
Can Be Expected Off Of This Deal
As far as this deal is concerned, it can be said
with utmost certainty that the deal will help in breaking the jargon in the
Global Industry: And Help in Transforming The Car Industry.
Previously, the global industry had a worth of $4
trillion. The numbers of businesses prevalent in 2019 were 594,980 and annual
growth in the industry from 2014 to 2019 experienced a 2.7% point change.
Both PSA and Fiat Chrysler have come together to
refine the industry. The pledge is huge and the numbers are significant. What
can be said about this deal is that Good Things Will Come Through.
PSA-Fiat Deal: Explained.
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If you look at it closely, PSA-Fiat Chrysler is one of the oldest in the industry. They combine
big European operations under political/trade unions who have promised to
resist any move or motive to cut jobs.
Their purpose is big:
To help the industry: and efforts
of supply/demand (incessant increases & decreases) to assure consistency in
the automotive industry and economy per se.
As of now, there are few
significant problems in the global automotive industry including the following:
- Big economic
slowdown
- Lack of business
activity
- Stricter emission
norms (From BS-IV to BS VI)
- Compliance is towards
new safety reforms (Costly Vehicles; More Economic Losses).
PSA-Fiat Chrysler merger will be
bringing together the Peugeot family, which is well known in the automotive
industry (a 130 year old company), to tackle subsequent problems in the car
industry and Fiat.
Furthermore, the overall
perspective is to make things more efficient. Other names that are a part of
this deal are: Fiat Agnelli Clan, of which, John Elkann (the scion of the
company) will be holding the combined group.
The board will be held by 11 strong individuals, who will be holding a 5 member nominated deal by the PSA and the FCA. There will be labor representatives from both.
Their agenda is: let’s bring back
things together’: Bigger And Better.
The deal is big and one of the
most-awaited of 2019. This deal could be very fruitful for the car industry.
Important Details About The Deal
If this merger is led
significantly, shareholders will be receiving a $4.67 per share a dividend. PSA
shareholders will be receiving a spin off stake in Faurecia (France) as well; with
a €1.22 per share a dividend.
For now, Fiat Chrysler is trading
at a preferable 7% discount against the PSA.
Furthermore, a lot has been written
about the planned merger between the two big names in the industry. This merger
will include Fiat Chrysler (NYSE: FCAU) and (BIT: FCA), along with French PSA
Group (OTCPKL PEUGF) and (EPA: UG) to create the biggest automaker in the world
(and now the 4th largest) amongst others.
According to the company, the
binding agreement between the mergers suggests the following.
The difference in this merger and
why it is attracting so much attention is the fact that Fiat Chrysler and PSA
is essentially a merger of equals (50-50). The merger is complex than your
usual average stock merger.
Fiat Chrysler, in and over the
course of 2020, is subject to a 1.1 billion euro ordinary dividend. This will
be working to $0.78 a share.
Furthermore, shareholders will be
receiving a 5.5 billion euro special dividend or let’s just say a $3.89 a Fiat
Chrysler share.
Moreover, as far as the PSA
shares are concerned, PSA will be spinning off a 46% stake in Faurecia (OTCPK:
FURCF) (EPA: EO) and a French automotive supplier to its shareholders.
The Deal
PSA-Fiat Chrysler is an interesting merger because
there is a lot at stake. It is huge because it is bringing together big,
renowned names in the industry.
The essence of this deal is that once things get
going in the right direction, there will be a lot of steady changes in the
global car industry. Things will start moving at a fast pace.
Once it starts, things will simmer down soon. The
new deal will be bringing in more man power and realistic returns. When there
are realistic returns returns, there will be close and higher productivity and
therefore, maximum returns
(overtime).
The benefits of this deal could easily outweigh the negatives of this deal and result in profits easily. Once this deal gets the support of the masses, it will automatically be enough to generate employment as well.
Conclusive Summary
PSA-Fiat Chrysler deal is
important because it is a gateway for consistent pathways. This deal, if it
materializes fully, will turn into a billion dollar matchup.
The purpose behind this big,
massive, Chrysler and Peugeot’s deal is to try to tackle the structural
upheaval in the auto industry. Their idea is to first reshape the car industry, as it is going through a tricky
phase of transformation.
Things are slow on the automotive
end. Common problems include blockage in pipelines, low returns, lack of
apprehension, slow movement and activity. The new merger, however, is here to
solve all of that.
The PSA-Fiat merger will need
approval from both European and U.S. regulators. Financing will be a concern
but Peugeot’s involvement with Dongfeng as well, a China based company and
others in the same deal, will stick well with the goal of the company.
However, if we talk about the
concerns of this deal and the facts emerging from it, we can say that it will
take time for things to materialize (off of this merger) but once it does, it
would mean bigger and better things.
Politics also play a major role
in this deal.
I can also say that if this deal
materializes in the next 2-3 years, it will have enough space to essentially
let the outflow of cars to other countries and free transport in their own
countries. The deal will open many barricades to development and lead to
economic prosperity.
The PSA-Fiat Chrysler deal is one
of the most talked about deals in the industry. The problem with this deal is
that it will not suffice to exemplary stance if it is not real. Secondly, if it
is real, then it could definitely help with the upward and downward pipeline in
the car industry and switch things back to normal. There is a lot of money
involved and who doesn’t need cars.
If the deal materializes fully,
it will help with returns such as:
- Successive returns in
the first year of operation
- Better results in the
next year after the year of operations
- Improvement after the
3rd year of maximum operations
- Higher profits,
returns, success, overall peace and wellbeing (which will result in massive
gains for the company and stability in the automotive industry- through their
efforts and work).
PSA-Fiat deal is a confirm
development and stamp towards elongated growth. It is a matter of conscience
now that the World wakes up to terrible enhancements in “reverse” and move
towards the Right direction. Big mergers such as these ones will turn out to be
an undeniable force to overcome all directional problems especially in the
automotive/automobile industry.
Finally;
The PSA-Fiat Chrysler deal hasn’t
even started yet and it has already attracted global attention. It is aiming
towards bringing enhanced growth and cooperation. We can also say that with the
help of this deal, major problems in the automotive industry can be dealt with
easily and securely. This, however, is if, things come to stance effectively. The
benefits of this massive deal will breakthrough barriers in the global
automobile industry.