UK Markets closed

$52bn Fiat Chrysler and PSA merger signed off by shareholders

A man passes cars on a showroom forecourt in west London November 6, 2008. British new car registrations fell by an annual 23 percent in October, the steepest decline this year, the Society of Motor Manufacturers and Traders (SMMT) said on Thursday. REUTERS/Toby Melville (BRITAIN)
If fully approved, the move would create the world’s fourth largest car maker. Photo: REUTERS/Toby Melville

Investors in Peugeot-owner PSA and Fiat Chrysler (FCAU) have approved the pair’s merger, clearing one of the final hurdles for the blockbuster automotive deal.

The merger was backed by more than 99% of PSA investor votes cast on Monday morning, according to a report by Reuters. Fiat Chrysler shareholders also approved the merger, with more than 99% voting in favour on Monday afternoon.

The deal will create the world’s fourth largest car maker, bringing PSA brands such as Peugeot, Citroen and Vauxhall together with Fiat, Jeep and Chrysler.

The new company is set to be worth $52bn (£38bn) and will be known as Stellantis, which means to brighten with stars. Execs have said the deal will provide significant cost savings and help keep both businesses competitive as the auto industry adapts to challenges such as the rise of electric vehicles.

The merger was first announced in late 2019 and approved by EU competition chiefs before Christmas.

Documents released by PSA said: “Following today’s approval by shareholders and receipt of the final regulatory clearances over the course of the last month, including notably from the European Commission and the European Central Bank, FCA and Groupe PSA expect to complete the combination on 16 January 2021.”

READ MORE: Tesla 2020 deliveries fall just shy of Musk's targets after bullish year

“We are ready for this merger,” PSA chief executive Carlos Tavares told an online meeting of shareholders on Monday.

He said the final date for the closure of the deal would be announced once all shareholder approvals were granted.

Shareholding structures will be shaken up as part of the merger, with existing double voting rights to be scrapped. These rights are accrued over time and give investors more weight in decisions.

The tie-up between France’s PSA and Italian-American group Fiat Chrysler has led to concerns about possible factory closures. The group is set to have spare production capacity of around six million cars. PSA, which employs around 3,000 workers in the UK under its Vauxhall brand, pledged not to close any factories in November.

Watch: What is inflation and why is it important?