Fiat sticks by terms of PSA deal after dividend cut report
- FCA and PSA plan to finalise their merger by the first quarter of next year.
Fiat Chrysler (FCA) said the terms of its merger with France's PSA had not changed after an Italian newspaper report that it was looking to spin off assets to reduce a planned 5.5 billion euro ($6.2 billion) cash pay-out to its shareholders.
FCA said on Friday that it was sticking to the deal agreed with PSA in December before the coronavirus crisis hit demand for cars.
"The structure and terms of the merger are agreed and remain unchanged," a spokesman for the Italian-American automaker said.
Also check these Vehicles
40 kWh
150 Km
3996.0 cc
Petrol
FCA and PSA plan to finalise their merger by the first quarter of next year. PSA declined to comment.
Also Read : Fiat Chrysler, PSA should revise merger terms, says investor
Italian business newspaper Il Sole 24 Ore said that FCA could conserve cash by reducing the special dividend, possibly by handing shareholders assets as compensation.
Il Sole reported that talks were at a very early stage and no decision had been taken, adding the that aim was to keep the 5.5 billion euro value of the special dividend but to turn its "nature" from cash to assets.
FCA, has just agreed a 6.3 billion euro state-backed loan to help its Italian unit and the whole country's automotive industry to weather the crisis.
Although this does not bar FCA from paying the dividend, as it is not due until 2021 and would be paid by Dutch parent company Fiat Chrysler Automobiles NV, Italian politicians have called into question such a large cash pay-out.
Also Read : Merger with Fiat Chrysler on track, says Peugeot CEO
Options being considered include spinning off the Sevel van business, a 50-50 joint venture between the two groups, or FCA's Alfa Romeo and Maserati brands, Il Sole said.
Sevel, which produces vans in Atessa's plant in central Italy, Europe's largest van assembly facility, could be valued between 2.5 and 3 billion euro, Il Sole said.
Its spin-off to FCA shareholders could also help address European Union concerns about the merger's consequences on competition in the van segment.
Also Read : Fiat and PSA likely face longer EU antitrust probe of merger
This option looks however complicated, Il Sole said, as it would require PSA transferring its 50% stake in Sevel to FCA.
Another option is scrapping a planned spin-off of PSA's controlling stake in parts maker Faurecia, Il Sole said.
A source close to the matter said that PSA could instead sell its Faurecia stake before the merger and keep the cash proceeds of the sale within the new merged company.
