For FCA, it is a bit of a matter of life or death. Especially after the failure of the alliance with Renault. The company is in trouble. The Agnelli family, which still owns 28% of FCA, has disappointed the Italian brands of the group. Maserati, Lancia, Alfa Romeo they are just a shadow of themselves. Fiat's market share in Europe has halved in thirty years.
The Agnellis never wanted to restructure the company, nor invest in new models and even less in the electric ones. Their engines pollute and they had to buy pollution credits from Tesla for 1.8 billion euros to avoid fines. In fact, FCA still exists only through its American subsidiary, with Jeep and RAM which produces the pickups that ensure the group's main results.
PSA, for its part, it can live alone. The company has been straightened. He successfully absorbed Opel. It occupies a strong position in Europe. But this is his Achilles heel. In fact, the European market is now saturated. This means that it should no longer grow in volume and will suffer an upheaval with the new hybrid and electric vehicles that require huge investments. PSA has tried to develop in China. Without success, despite the support of its shareholder and partner Dongfeng. The other big world market remains: America. Hence the interest in the operation with FCA that could open this market to the French group.
The question is: who will dominate the other, who will benefit the most from this merger? In the business world, peer marriage does not exist. There is always one that imposes its culture on the other. In the 50/50 merger project, the Agnelli family holding company owned 14% of the new unit. The three main shareholders of PSA – the Peugeot family, the BPI and the Chinese Dongfeng – each reported 6.3%. The rest of the capital is held by the market, essentially Anglo-Saxon investment funds.
The board of directors would be composed of eleven members. FCA would appoint two representatives and select three independent directors, the same as PSA. The eleventh position, that of the president, would go to Carlos Tavares, the current head of the PSA group, who would have an advantage. But the appointment of the two directors poses a problem of equality among its current shareholders in PSA. In the initial project, there is no room for Dongfeng. Furthermore, the Peugeot family has several branches.
Therefore, the unit of units of PSA is not insured. The Peugeot family still feels like they are the "leaders" of the PSA group. Their names are still on the company title page. This would no longer happen in the event of a merger, the future group will have to find a new name. The balance is therefore complex to find. Especially since the US authorities will put their nose into this merger project, due of Dongfeng.
In the current tense climate of relations between China and the United States, the presence of a Chinese public company on the board of the PSA / FCA can trigger the wrath of Washington. Another topic of concern: the possible social break. One of the arguments put forward for the merger is, as usual, that of the synergies that it brings with economies of scale and rationalizations. The new group will employ 408,000 people, of whom 60,000 in Italy.
It will have 22 assembly platforms (of which 14 for FCA and its 14 brands) and 54 factories. If PSA has "cleaned up" its industrial facilities, the same cannot be said for FCA. Carlos Tavares has undertaken not to touch the Italian brands and sites whose different factories use only 50% of their capacity. Where will they find the promised savings to the financial markets for 3.7 billion euros?
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https://www.clubalfa.it/79476-le-ombre-del-matrimonio-psa-fiat-chrysler
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