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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Peugeot    UG   FR0000121501


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Merged PSA and Fiat would retain all brands - Tavares

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11/08/2019 | 07:28am EST
FILE PHOTO: Logos of Peugeot and Fiat are seen in this illustration picture

PARIS/TURIN, Italy (Reuters) - Peugeot maker PSA Group and Fiat Chrysler would retain all of their car brands if their planned $50 billion merger goes ahead, the would-be chief executive of the combined group said on Friday.

PSA CEO Carlos Tavares, seen as the architect of PSA's turnaround and in line to take the operational helm in the Fiat tie-up, said in a TV interview that the companies complemented each other well geographically and in terms of technology and brands.

FCA derives 66% of its revenue from North America compared with only 5.7% for PSA, Refinitiv Eikon data shows. Europe remains the main revenue driver for PSA.

"There's no doubt it's a very good deal for both parties. It's a win-win," Tavares told France's BFM Business, in his first interview since the French and Italian companies announced plans to create the world's fourth-largest auto maker last week.

Fiat Chrysler (FCA) Chairman John Elkann, who would chair the combined group, said on Friday at an event in Turin that the 50-50 share merger would help the Italian carmaker "seize great opportunities."

The deal, which would help the firms pool resources to meet tough new emissions rules and investments in electric and self-driving vehicles, as well as counter a broader downturn in car markers, is still at an early stage.

PSA and Fiat have said they aim to reach a binding outline in the coming weeks, but still face questions over potential job losses, as well as scrutiny over whether the transaction favours one party more than the other.

Tavares said the brands that would come under the combined group's umbrella - PSA's five passenger car labels include Citroen and Vauxhall, while FCA has nine, including Alfa Romeo, Maserati and Jeep - were all likely to survive.

"As of today, I don't see any need to scrap any of the brands if the deal came to pass. They all have their history and their strengths," Tavares said.

Few carmakers have as large a portfolio, with German rival Volkswagen counting 10 passenger brands, if newer Chinese ones such as electric vehicle label Sihao are included.


The merger will also require approval from anti-trust authorities.

Tavares said he did not expect the companies to have to make major concessions to meet competition rules, but added they were ready to do so, without giving details.

One of thorniest aspects of the deal are the potential job losses at stake in a group with a combined workforce of around 400,000, with governments in Rome and Paris as well as unions poring over the implications.

Tavares reaffirmed that the firms could reach billions of euros in annual cost savings without closing factories. But he did not rule out job cuts when pressed, only stating: "That's the car industry, it's not about PSA."

"Margins are continually under pressure and you have to permanently be looking for productivity gains," he added, pointing to stricter regulations on everything from safety to pollution.

Answering a question on the merger being already a done deal, Elkann said a long time could pass between the announcement of a merger and getting it over the line.

Tavares, meanwhile, said the companies remained prudent, adding he'd seen transactions scuppered when parties got into the details, but that talks towards a binding agreement were evolving favourably.

"Given all the necessary regulatory approvals that need to be granted, such a deal cannot be closed in less than a year," Tavares added.

FCA abandoned merger talks with PSA's French rival Renault less than five months ago. ($1 = 0.9051 euros)

By Elisa Anzolin and Gilles Guillaume

Stocks mentioned in the article
ChangeLast1st jan.
FIAT CHRYSLER AUTOMOBILES 1.00% 13.326 End-of-day quote.4.04%
PEUGEOT 2.24% 21.89 Real-time Quote.17.40%
RENAULT 0.40% 42.46 Real-time Quote.-22.16%
VOLKSWAGEN AG 2.07% 183.3 Delayed Quote.31.95%
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Financials (EUR)
Sales 2019 74 544 M
EBIT 2019 5 984 M
Net income 2019 3 269 M
Finance 2019 8 269 M
Yield 2019 4,38%
P/E ratio 2019 6,00x
P/E ratio 2020 5,69x
EV / Sales2019 0,15x
EV / Sales2020 0,13x
Capitalization 19 589 M
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Technical analysis trends PEUGEOT
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Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 18
Average target price 25,86  €
Last Close Price 21,89  €
Spread / Highest target 39,3%
Spread / Average Target 18,1%
Spread / Lowest Target -22,3%
EPS Revisions
Carlos Tavares Chairman-Management Board
Louis René Fernand Gallois Chairman-Supervisory Board
Maxime Jean Alfred Picat Senior Vice President & Operational Director
Philippe de Rovira Chief Financial Officer
Carla Gohin Senior VP-Research & Advanced Engineering
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