Fiat Cuts Dividend Ahead of Merger -- WSJ
15 Septiembre 2020 - 02:02AM
Noticias Dow Jones
By Eric Sylvers in Milan and Ben Dummett in London
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 15, 2020).
Fiat Chrysler Automobiles NV and PSA Group changed the terms of
their merger to preserve cash as the two car makers shore up their
financial positions following the negative effects of the
coronavirus pandemic.
Fiat Chrysler will now pay a cash dividend of EUR2.9 billion
($3.44 billion) to its shareholders ahead of the closing of the
merger, down from the previously agreed EUR5.5 billion, the
companies said in a joint statement Monday.
PSA, which owns the Peugeot and Citroën brands, agreed to scrap
an agreement to spin off its 46% stake in Faurecia SE ahead of the
closing. Instead, the stake in the publicly traded auto-parts
maker, which is worth about EUR2.7 billion, will be spun off
following the closing.
Announced in October, the all-share transaction valued the
combined company at close to $50 billion. Both sides agreed to a
share swap to live up to the deal's merger-of-equals billing. To
help balance the values of the two companies, they agreed on the
cash dividend for Fiat Chrysler's shareholders, and PSA's
shareholders were to be given the Faurecia stake.
However, the FCA's cash dividend grew increasingly controversial
among some PSA investors because of the pandemic fallout and the
need to preserve cash. Reducing the payout alleviates those
worries. At the same time, by getting half of PSA's stake in
Faurecia after the deal closes, FCA shareholders will receive a
total payout approaching the same level as previously agreed, but
part of that will be in Faurecia stock instead of all cash.
The two companies said they are still on track to complete the
deal by the end of March. Following the merger, the company will be
called Stellantis.
The cut to the cash portion of the dividend comes after Fiat
Chrysler, like most of its peers, reported a second-quarter loss as
coronavirus lockdowns halted production and led to a drop in sales.
While Fiat Chrysler has abundant liquidity, in the second quarter
it burned much more cash than it had coming in. Fiat Chrysler Chief
Executive Mike Manley has said he is expecting a strong second-half
performance from the company and that improvement was already
apparent at the end of the first half.
The two companies said their boards will consider paying their
respective shareholders a EUR500 million dividend before closing or
a EUR1 billion dividend to all shareholders following the
conclusion of the merger. A decision on that potential payout,
which will be paid only if approved by the boards of both
companies, will be made in the coming months based on how the
companies perform and on market conditions.
When the two companies first announced their deal, it included a
separate EUR1.1 billion dividend to be paid by each company to
their shareholders, but that was scrapped in May when the extent of
the damage from the pandemic became clearer.
The companies said they expect synergies following the full
integration of the two companies to be more than EUR5 billion a
year, up from a previous estimation of EUR3.7 billion.
--Nora Naughton contributed to this article.
Write to Eric Sylvers at eric.sylvers@wsj.com and Ben Dummett at
ben.dummett@wsj.com
(END) Dow Jones Newswires
September 15, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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