The French and Italian governments as well as
unions will be looking for such details, given
the national significance of car-making to both
economies. The French government helped
rescue PSA Peugeot in 2014 and owns a 12%
stake through the state investment bank.
While the merger of Fiat and Chrysler has
been a success, thriving on the strength of
the U.S. market and the executive prowess of
longtime CEO Sergio Marchionne, the history
of car mergers is littered with failed tie-ups.
Most famous among those is the short-lived
Daimler-Chrysler merger, which foundered on
cultural differences between the German and
U.S. executives.
The new company will start with a strong
base in Europe, where PSA is the second-
largest carmaker, while Fiat makes most of
its profits in North America and has a strong
presence in Latin America. It will be looking
to strengthen its position in China, where
both companies lag.
“That is part of the opportunities,” Tavares said.
’’We are not happy with our performance there.
We think we should be doing better in China.”
Tavares said the deal has the support of
Chinese partner and investor Dongfeng. As
part of the deal, Dongfeng’s stake in the new
company will be diluted from 6.2% to 4.5%.
Fiat Chrysler will pay its shareholders a 5.5
billion-euro ($6.1 billion) premium, raising
questions about whether the new company
will be saddled with debt. Analysts estimate
that Peugeot is paying a hefty 32% premium to
take control of Fiat Chrysler.