LONDON, May 27, 2019 /PRNewswire/ --
IMPORTANT NOTICE
By reading the following release, you agree to be bound by
the following limitations and qualifications:
This press release is for informational purposes only and is
not intended to and does not constitute an offer or invitation to
exchange or sell or solicitation of an offer to subscribe for or
buy, or an invitation to exchange, purchase or subscribe for, any
securities, any part of the business or assets described herein, or
any other interests or the solicitation of any vote or approval in
any jurisdiction in connection with the proposed transaction or
otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
This press release should not be construed in any manner as a
recommendation to any reader of this press release.
This press release is not a prospectus, product disclosure
statement or other offering document for the purposes of Directive
2003/71/EC of the European Parliament and the Council of
November 4th, 2003, as amended, in
particular, by Directive 2010/73/EC of the European Parliament and
the Council of November 24th, 2010,
as amended and as implemented in each member State of the European
Economic Area and under French and Dutch law.
An offer of securities in the
United States pursuant to a business combination transaction
will only be made, as may be required, through a prospectus which
is part of an effective registration statement filed with the US
Securities and Exchange Commission. Shareholders of Fiat Chrysler
Automobiles N.V. ("FCA") and Renault S.A. ("Renault") who are US
persons or are located in the United
States are advised to read the registration statement when
and if it is declared effective by the US Securities and Exchange
Commission because it will contain important information relating
to the proposed transaction. You may obtain copies of all documents
filed with the SEC regarding the proposed transaction, documents
incorporated by reference, and FCA's SEC filings at the SEC's
website at http://www.sec.gov. In addition, FCA will make the
effective registration statement available for free to shareholders
in the United States.
- Combined business to be 50% owned by FCA shareholders and 50%
by Groupe Renault shareholders – balanced governance structure and
majority of Board of Directors being independent
- Combination would create the 3rd largest global OEM with
8.7m vehicle sales and a strong market presence in key regions
and vehicle segments
- Broad and complementary brand portfolio would provide full
market coverage, from luxury to mainstream
- Combined company would be a world leader in the rapidly
changing automotive industry with a strong position in transforming
technologies, including electrification and autonomous driving
- No plant closures as a result of the combination
- In excess of €5 billion estimated annual run rate synergies
incremental to existing Renault-Nissan-Mitsubishi Alliance
(Alliance) synergies
- Strong combined balance sheet allowing for flexible capital
allocation and robust dividend policy
- Significant benefits to the other Alliance partners including
~€1 billion of additional estimated run rate synergies
Fiat Chrysler Automobiles N.V. has today delivered a non-binding
letter to the Board of Groupe Renault proposing a combination of
their respective businesses as a 50/50 merger.
The FCA proposal follows initial operational discussions between
the two companies to identify products and geographies where they
could collaborate, particularly as they develop and commercialize
new technologies. These discussions made clear that broader
collaboration through a combination would substantially improve
capital efficiency and the speed of product development. The case
for combination is also strengthened by the need to take bold
decisions to capture at scale the opportunities created by the
transformation of the auto industry in areas like connectivity,
electrification and autonomous driving.
The proposed combination would create a global automaker,
preeminent in terms of revenue, volumes, profitability and
technology, benefitting the companies' respective shareholders and
stakeholders. The combined business would sell approximately 8.7
million vehicles annually, would be a world leader in EV
technologies, premium brands, SUVs, pickup trucks and light
commercial vehicles and would have a broader and more balanced
global presence than either company on a standalone basis.
The benefits of the proposed transaction are not predicated on
plant closures, but would be achieved through more capital
efficient investment in common global vehicle platforms,
architectures, powertrains and technologies. FCA has a history of
successfully combining OEMs with disparate cultures to create
strong leadership teams and organizations dedicated to a single
purpose. Therefore, FCA's Board strongly believes that this
combination, which would have the scale, expertise and resources to
navigate the rapidly changing automotive industry, would create new
opportunities for employees of both companies and for other key
stakeholders.
Under the terms of the proposal, shareholders in each company
would receive an equivalent equity stake in the combined company.
The combination would be carried out as a merger transaction under
a Dutch parent company. The Board of the combined entity would
initially be composed of 11 members, with the majority being
independent and with equal representation of four members each for
both FCA and Groupe Renault, as well as one nominee from Nissan.
Further, there would be no carryover of existing double voting
rights. However, all shareholders would have the opportunity to
earn loyalty voting rights from the completion of the transaction
under a loyalty voting program. The parent company would be listed
on the Borsa Italiana (Milan),
Euronext (Paris) and the New York
Stock Exchange.
The benefits flowing from the combination of the two businesses
would be shared, 50% by current FCA shareholders and 50% by current
Groupe Renault shareholders. Before the transaction is closed, to
mitigate the disparity in equity market values, FCA shareholders
would also receive a dividend of €2.5 billion (see Appendix). In
addition, prior to closing, there would be a distribution of
Comau's shares to FCA's shareholders or an incremental €250 million
dividend if the Comau spin-off does not occur.
Combining the businesses will bring together complementary
strengths. The combination would create a brand portfolio that
would provide full market coverage with a presence in all key
segments from luxury/premium brands, such as Maserati and Alfa
Romeo, to the strong access brands of Dacia and Lada, and would
include the well-known Fiat, Renault, Jeep and Ram brands as well
as commercial vehicles. Groupe Renault has a strong presence across
Europe, Russia, Africa and Middle
East, while FCA is uniquely positioned in the high margin
segments in North America and is a
market leader in Latin America.
FCA's evolving capability in autonomous driving, which includes
partnerships with Waymo, BMW and Aptiv, is complemented by Groupe
Renault's decade of experience in EV technology where it is the
highest selling EV OEM in Europe.
Groupe Renault also has a well-established and profitable financing
business (RCI Banque).
The combination would be highly value accretive for both FCA and
Groupe Renault shareholders, delivering in excess of €5 billion of
estimated annual run rate synergies, incremental to existing
Alliance synergies. These synergies would arise principally from
the convergence of platforms, the consolidation of powertrain and
electrification investment and the benefits of scale. FCA estimates
based on its experience, that approximately 90% of synergies would
come from purchasing savings (~40%), R&D efficiencies (~30%),
and manufacturing and tooling efficiencies (~20%). Included in
these estimated savings would be the potential to reduce the
combined number of vehicle platforms by approximately 20% and
engine families by approximately 30%. The full run rate of
estimated synergies is expected to be achieved by the end of year
six following closing, with about 80% achieved in year four. Taking
into account the impact of the approximately €3-4 billion in
cumulative implementation costs, it is estimated that the synergies
would be net cash flow neutral in year one and positive from year
two onward.
Geographically, based on FCA and Groupe Renault's 2018 global
sales, the combined company would be #4 in North America, #2 in EMEA and #1 in
Latin America and would have the
increased resources necessary to grow its footprint in the APAC
region. On a simple aggregated basis of 2018 results, the combined
company's annual revenues would be nearly €170 billion with
operating profit of more than €10 billion and net profit of more
than €8 billion.
While the proposal focuses on a combination of FCA and Groupe
Renault, FCA looks forward – as part of a combined enterprise with
Groupe Renault – to working with Groupe Renault's Alliance partner
companies on ways to create additional value for all Alliance
members. FCA recognizes the standing and achievements of Groupe
Renault's partners and sees significant expected benefits to all
parties from the expanded partnership. The FCA and Groupe Renault
combination together with its Nissan and Mitsubishi partners would
be the largest global OEM alliance, selling more than 15 million
vehicles annually. The additional synergies stemming from the
merger of FCA and Groupe Renault that are expected to accrue to
Nissan and Mitsubishi purely as members of the Alliance are
estimated to be worth an incremental €1 billion annually.
This proposal offers the opportunity to create the #3 global
automotive company with broad, complementary and strong brand and
geographic presence and important strengths in transforming
technologies. It also confirms and enhances the value of the
existing Alliance and its potential to become even stronger in the
future. While there is no certainty that this proposal will result
in a transaction, the Board of FCA has strongly supported and
approved the proposal which will now be reviewed by the Groupe
Renault Board of Directors. The definitive agreements for the
proposed combination are subject to negotiation and to final review
and approval by the FCA and Groupe Renault Boards. Completion of
the proposed combination would also be subject to customary closing
conditions, including approval by each company's shareholders, as
applicable, and the satisfaction of antitrust and other regulatory
requirements.
Information related to the proposal will be made available from
time to time on the FCA website
(https://www.fcagroup.com/en-US/Pages/home.aspx).
Financial advisers
Goldman Sachs International
d'Angelin & Co
Nomura International Plc
Legal advisers
Sullivan & Cromwell LLP
Darrois Villey Maillot Brochier
Investor enquiries:
FCA
Joe Veltri
Vice President, Investor Relations
Tel: +1 248 576 9257
investor.relations@fcagroup.com
Media enquiries:
FCA
Niel Golightly,
niel.golightly@fcagroup.com, +1 248 933-6285
Shawn Morgan,
shawn.morgan@fcagroup.com, +1 248 512-2692
Andrea Pallard,
andrea.pallard@fcagroup.com, +39 0110030675
Fernao Silveira,
fernao.silveira@fcagroup.com, +55 11 4949-3901
UK
Gelso Consulting
Richard Holloway + 44 7342 023 763
richard.holloway@gelso.co.uk
Laura Gilbert + 44 7799 413 351
laura.gilbert@gelso.co.uk
Andrew Garfield +44 7974982337
andrew.garfield@gelso.co.uk
USA
Sard Verbinnen & Co
Robert Rendine, Kelsey Markovich
+1 212 687 8080
fca@sardverb.com
Italy
Community, Strategic Communications Advisers
Auro Palomba, Marco Rubino
+39 02 89404231
fca@communitygroup.it
France
Image 7
Anne-France Malrieu, Simon Zaks
+33 1 53 70 74 95
fca@image7.fr
Japan
Ashton Consulting
Dan Underwood, Daniel Fath
+81 3 5425-7220
fca@ashton.jp
APPENDIX
ECONOMIC TERMS EXCLUDING VALUE UPSIDE FROM SYNERGIES
€
|
|
FCA share price
(May 24 2019 Borsa Italiana closing share price)
|
11.46
|
Less: €2.5
billion equalizing dividend corresponding to €1.60 dividend per
share
|
(1.60)
|
Less: €250
million minimum incremental dividend corresponding to €0.16
dividend per share (if no Comau spin-off or sale with net proceeds
being
distributed)
|
(0.16)
|
Adjusted FCA
reference price
|
9.70
|
Exchange ratio to
achieve 50/50 ownership
|
X 5.328
|
Implied value per
Groupe Renault share
|
51.68
|
PLUS: Groupe
Renault proposed ordinary dividend (ex-date Jun 18
2019)*
|
3.55
|
Implied total
value per Groupe Renault share
|
55.23
|
*Subject to approval at Groupe Renault June 12 2019 Shareholders' Annual General
Meeting
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. These
statements are based on the FCA Group's current expectations and
projections about future events and, by their nature, are subject
to inherent risks and uncertainties. They relate to events and
depend on circumstances that may or may not occur or exist in the
future and, as such, undue reliance should not be placed on them.
Actual results may differ materially from those expressed in such
statements as a result of a variety of factors, including:
volatility and deterioration of capital and financial markets,
changes in commodity prices, changes in general economic
conditions, economic growth and other changes in business
conditions, weather, floods, earthquakes or other natural
disasters, changes in government regulation, production
difficulties, including capacity and supply constraints,
uncertainties as to whether the proposed business combination will
be agreed or consummated or as to the timing thereof as well as the
realization of the anticipated synergies therefrom, and many other
risks and uncertainties, most of which are outside of the FCA
Group's control.
FCA and its affiliates, directors, advisors, employees and
representatives, expressly disclaim any liability whatsoever for
such forward-looking statements.
Forward-looking statements speak only as of the date they are
made. FCA does not assume any obligation to update any public
information or forward-looking statement in this communication to
reflect new information, future events or circumstances or for any
other reason after the date of this communication, except as may be
required by applicable laws, and any opinion expressed in this
press release is subject to change without notice. FCA shall not
have any obligation to correct any inaccuracies therein or
omissions therefrom which may become apparent.
This press release includes some information on specific
transaction proposals that remain subject to discussions and
certain approvals and other conditions.
About FCA N.V.
Fiat Chrysler Automobiles (FCA) is a global automaker that designs,
engineers, manufactures and sells vehicles in a portfolio of
exciting brands, including Abarth, Alfa Romeo, Chrysler, Dodge,
Fiat, Fiat Professional, Jeep®, Lancia, Ram and Maserati.
It also sells parts and services under the Mopar name and operates
in the components and production systems sectors under the Comau
and Teksid brands. FCA employs nearly 200,000 people around
the globe. For more information regarding FCA, please
visit www.fcagroup.com.
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