FCA’s Elkann says reasons for PSA merger are ‘stronger than ever’

MILAN — The factors for the merger of Fiat Chrysler Cars and PSA Group are “much better than at any time,” FCA Chairman John Elkann stated, as the COVID-19 pandemic provides to the industry’s current difficulties.

Addressing shareholders of Exor, the Agnelli family’s holding firm, Elkann stated Wednesday that preparatory perform for the merger was continuing “on time and as envisaged.”

FCA and Peugeot-maker PSA have agreed a tie-up to generate the world’s fourth biggest automaker in a offer predicted to close in the initial quarter of future 12 months.

“The strategic logic of this blend for the two providers and all their staff members, is much better than at any time,” stated Elkann, who is also Exor chairman and CEO.

FCA has faced criticism in Italy more than a 5.5 billion euro ($six billion) exclusive dividend to shareholders as part of its tie-up with PSA, when its nearby business is in talks with Rome more than a six.3 billion euro condition-backed financial loan to cope with the coronavirus pandemic.

The doable payment of such a significant dividend when the coronavirus disaster has still left funds-starved companies pushing for authorities aid has been questioned in Italy’s ruling coalition.

But the dividend — to be compensated by guardian firm Fiat Chrysler Cars NV in the Netherlands — is a central part of the all round benefit of the fifty-fifty merger and some analysts say the offer could continue to unravel if different conditions ended up imposed.

Italy, however, could seem into FCA’s exclusive payout, a senior authorities resource has stated.

Treasury undersecretary Pier Paolo Baretta on Wednesday informed Reuters that Rome may possibly take into consideration extending a ban on dividend payments for providers accessing condition promise from an current deadline of Dec. 31, 2020, to a twelve-thirty day period interval subsequent the financial loan promise concession.

“That would be reasonable. Performing additional may hit the companies’ benefit,” Baretta stated.

FCA declined to comment.

This could most likely complicate FCA’s plans, as the exclusive dividend payment is owing just prior to the closing of the merger with PSA.

Fidentiis analyst Marco Opipari stated that if the authorities imposed conditions, FCA could decide to modify its strategy on liquidity requests.

“FCA could also waive the condition promise on the new credit history line and could most likely also lower the amount of money of the new credit history line, offered that the team had the liquidity,” he stated.

Opipari stated it was “reasonable” that FCA would lower its amazing dividend offered the existing disaster scenario.

“FCA’s amazing dividend could be decreased to 2.4 billion euros ($2.six billion),” he stated, incorporating that such a move really should be counterbalanced by a PSA’s decision to give up a planned spin-off of its managing stake in French pieces maker Faurecia.