A Peugeot 508 car is seen at the 97th Brussels Motor Show in the Brussels Expo in Brussels, Belgium, Jan. 18, 2019. (Xinhua/Zheng Huansong)
The 50-billion-U.S. dollar deal that would put Fiat-Chrysler brands like Fiat, Jeep, Dodge, and Maserati under the same corporate roof as French brands including Peugeot, Opel, and Citroen, still needs approval from European antitrust regulators.
But the biggest risk to the merger, according to analysts, is related to the economic slowdown sparked by the coronavirus pandemic.
ROME, May 25 (Xinhua) -- Both sides of the pending merger between Italian-American carmaker Fiat-Chrysler and French rival Peugeot insist the global coronavirus outbreak will not undermine their plans to create the world's fourth-largest automobile maker.
But analysts said it will take a lot of extra work to make the deal work out.
The 50-billion-U.S. dollar deal that would put Fiat-Chrysler brands like Fiat, Jeep, Dodge, and Maserati under the same corporate roof as French brands including Peugeot, Opel, and Citroen, still needs approval from European antitrust regulators. The European Commission's competition department said earlier this month it would issue its ruling on whether or not the deal would limit choice for European consumers by June 17.
But the biggest risk to the merger, according to analysts, is related to the economic slowdown sparked by the coronavirus pandemic.
Worldwide sales of new cars have reportedly fallen by more than 80 percent since March compared to the same period a year ago, according to industry monitoring groups. The dramatic drop-off in sales has drained the coffers of both companies and sent share prices for the would-be partners lower.
On May 13, the two companies announced they would not distribute any dividends to shareholders this year, as a way to hold into more cash as a way to weather the global outbreak.
"Both companies have suffered since the start of the pandemic," Paolo Bricco, an automobile sector analyst who has authored multiple books about Fiat-Chrysler, told Xinhua. "But because it was in a weaker financial situation from the start, the recent events are probably having a bigger impact on Fiat-Chrysler."
Earlier this month, Fiat-Chrysler opened talks with Italian banking giant Intesa Sanpaolo and the Italian government to secure a three-year credit line worth as much as 6.3 billion euros (6.8 billion U.S. dollars) to help it weather the coronavirus crisis. The plan, still being negotiated, would require the Italian state to guarantee the loan from Intesa Sanpaolo.
Peugeot has not made a similar request, but analysts said it was not necessary since the French state is a major shareholder in the company.
Leaders from both companies said the merger deal will go forward as planned despite the difficulties stemming from the pandemic.
"All the workstreams for the 50-50 merger project we announced are proceeding on time and as envisaged," Fiat-Chrysler Chairman John Elkann said in a statement last week. "The strategic logic of this combination for the two companies and all their employees is stronger than ever."
In connection with the temporarily halted dividend policy, Peugeot made a similar statement: "There is no change to plan for a merger with" Fiat-Chrysler. ■