After nearly half a year of deliberation, the European Commission’s antitrust agency approved the merger application of Peugeot Citroën (PSA) and Fiat Chrysler (FCA) on December 21 local time.
The merger of the two companies is expected to be completed in the first quarter of next year, becoming the fourth largest automobile company in the world in terms of production. However, the European Commission’s approval is still conditional on companies to open up competition in the field of vans.
Forbes and Reuters reported on December 21 that the European Commission’s Competition Department approved the same day, marking the merger of Citroën and Fiat Chrysler to form the new company Stellantis for $38 billion, which is also the largest and most important car deal in 2020.
Stellantis’ name comes from the Latin “Stella” (star). After the merger, the original brands of the two companies, such as Opel, Citroën, Peugeot, Chrysler, Jeep, Alfa Romeo, Lancia, Abbas or Dodge, have been retained. The merger is planned to be voted by shareholders at the end of January next year.
The two companies said in a statement: “Peugeot Citroën and Fiat Chrysler Group warmly welcome the European Commission’s approval of the merger and establishment of Stellaantis, which will become the world’s leading new car company. The merger is expected to be completed by the end of the first quarter of next year.”
However, the EU still has requirements for mergers, mainly in the field of small commercial vehicles. In early July this year, the EU antitrust agency launched an in-depth review of the merger application. At that time, the European Union was worried that the merger would have an impact on the competition for small commercial trucks under 3.5 tons.
In the small commercial truck market in many countries, the top-selling models are basically from Citroën and Fiat Chrysler. Therefore, according to a statement from the European Commission, after the merger, one of the two most important competitions will exit the market.
After that, the two companies adjusted the wording of the merger proposal to respond to the concerns of the European Commission and customers, and finally passed the trial. The European Commission said that the two companies will allow competitors to use their truck repair and maintenance networks to help new entrants expand the market.
Mark Citroën also proposed to increase the production of its joint venture with Toyota in Japan and sell commercial trucks at a price close to cost.
Forbes reported that the merger will create the fourth largest automobile group in the world, after Volkswagen Group, Toyota, and the troubled Renault Nissan Alliance, and will surpass Ford and General Motors in the process. The group will have a strong group of brands, from Ram and Jeep to Peugeot, Citroën and Opel.
However, there are also some brands under the group that are currently performing poorly, such as DS, Dodge, Alfa Romeo, Fiat, Blue Banner, Chrysler and Maserati.
Stellantis aims to cut operating costs by $6 billion a year while keeping all plants running. Forbes said that the merger was actually a “acquisition” of Fiat Chrysler by French companies.
Fiat Chrysler’s controlling shareholder is Exor, the holding company of the Italian Agelli family, while investors marked Citroën include the Peugeot family, the French government and Dongfeng Motor Company from China.