By Jessica Sier

Peugeot SA shareholder Phitrust has called on the French car maker to amend the terms of its merger with Fiat Chrysler Automobiles NV to better reflect the changed state of the global auto industry.

Activist investor Phitrust urged shareholders to reject the initial terms of the merger at the upcoming extraordinary general meeting to be held on June 25.

The existing terms include a 5.5 billion-euro ($6.17 billion) special dividend to Fiat Chrysler shareholders.

"Even back in December 2019, the respective situations of each group didn't justify a 50-50 merger," Phitrust said in a press release addressed to the chairman of Peugeot on Monday.

The investor, which has a focus on environmental, social and governance issues, also questioned the consequences of a failed merger, and the strategic vision.

"In view of the technological changes facing the automotive sector, which mean that it is no longer the manufacturers who have the innovative technologies (e.g. Google with autonomous driving), is the race for size with another manufacturer really the right answer?" Phitrust said.

A merger between Peugeot and Fiat Chrysler would create the fourth largest automobile company in the world.

The French investor said the two companies have weathered the coronavirus crisis differently, with Peugeot's strong balance sheet and cost-cutting measures showing resilience, while Fiat Chrysler's financial state appears more fragile.

Fiat Chrysler is poised to receive a state-backed credit facility from the Italian government worth EUR6.3 billion.

The merger itself is under investigation by the European Commission into whether it would reduce competition in Europe, with a decision due on or before Oct. 22.

Write to Jessica Sier at jessica.sier@wsj.com