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Newly Formed Auto Group 'Stellantis' Debuts on European Stock Markets, Shares Rise Nearly 8%

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【Summary】Shares of newly created auto conglomerate Stellantis NV began trading on the European stock markets in Paris and Milan on Monday and the new company is off to a strong start. Milan-listed shares of Stellantis started trading at 12.758 euros ($15.40) and rose nearly 8% to 13.55 euros ($16.36), giving the automaker a market cap of 39.2 billion euros ($47.3 billion).

Eric Walz    Jan 18, 2021 12:15 PM PT
Newly Formed Auto Group 'Stellantis' Debuts on European Stock Markets, Shares Rise Nearly 8%

Shares of newly created auto conglomerate Stellantis NV began trading on the European stock markets in Paris and Milan on Monday and the new company is off to a good start. Milan-listed shares of Stellantis started trading at 12.758 euros ($15.40) and rose nearly 8% to 13.55 euros ($16.36), giving the automaker a market cap of 39.2 billion euros ($47.3 billion). The Paris-listed shares traded around the same level.  

Stellantis shares will begin trading on the New York Stock Exchange (NYSE) on Tuesday under the ticker symbol "STLA". Over the weekend, PSA shares were exchanged into new FCA shares and All FCA shares were then renamed as Stellantis.

Stellantis was created via a merger between Italian-American automaker Fiat Chrysler Automobiles (FCA) and Groupe PSA, the parent company of French automaker Peugeot. The $52 billion dollar merger was agreed to back in Dec 2019 and was officially confirmed on Jan 4, 2021 after a vote from shareholders of both companies.

The new company is headquartered in Amsterdam, Netherlands but the company will keep its major operations in Michigan, Italy and France.

Fiat Chrysler (FCA) and PSA have said Stellantis can cut costs by more than 5 billion euros a year without plant closures. Chief Executive Carlos Tavares said the merger would add 25 billion euros in value for shareholders over the next five years, given the projected cost cuts as a result of the merger. 

The new company is the world's fourth largest automaker with an annual production of around 8 million vehicles with revenues of more than 165 billion euros. Stellantis is expected to be a major player in the auto industry's push towards electrification, especially in Europe.

"We have the scale, the resources, the diversity and the knowhow to successfully capture the opportunities of this new era in transportation," said Stellantis Chairman John Elkann said in a video on the Borsa Italiana website.

Elkann added that the coming decade would likely "redefine mobility as we know it." 

Stellantis will have 14 automotive nameplates, including FCA brands Fiat, Alfa Romeo,  Maserati and popular U.S. brands Jeep, Dodge and Ram. The company's European-focused PSA brands include Peugeot, Citroen, Opel and DS Automobiles.

The names and logos of each of the Stellantis brands will remain unchanged, but its not clear if all of the brands will continue after the merger.

Originally FCA sought to merge with French automaker Groupe Renault in early 2019, but the French government did not support the merger and the proposal was withdrawn. FCA then approached PSA later that year about a possible merger. The European Commission announced its approval of the merger on Dec 21, 2020.

The Stellantis Merger Marks a New Chapter for Fiat Chrysler Automobiles

Fiat Chrysler Automobiles was formed when Fiat acquired 100% of Chrysler in 2014, which resulted in Chrysler becoming a full subsidiary of the Italian automaker. 

Now Stellantis marks a new chapter for Fiat Chrysler Automobiles after 20 years of reorganizations, including a failed merger with Mercedes-Benz parent Dailmer in 1998.

U.S. automaker Chrysler Corporation merged with Daimler-Benz on May 7,1998. The merger was supposed to be a "merger of equals", but Daimler's plans for Chrysler never panned out, with the exception of a few jointly developed models such as the popular rear-wheel drive Chrysler 300. 

The merger of the two independent companies however resulted in frequent culture clashes between employees in Germany and the U.S. due to the different management style and operations of each company. 

In 2007, Daimler sold 80.1% of Chrysler to the American private equity firm Cerberus Capital Management just before the U.S. recession hit that resulted in Chrysler, as well as rival General Motors, filing for Chapter 11 bankruptcy protection.

Chrysler filed for Chapter 11 bankruptcy on April 30, 2009 during the height of the recession in order to help maintain its operations as it renegotiated its debts and other obligations. However with falling auto sales industry-wide at the time, Chrysler was unable to meet its obligations and ended up defaulting on over $4 billion in secured debts.

On June 10th, 2009, all of the company's assets were sold to the re-organized Chrysler Group LLC under the leadership of FIAT Group CEO Sergio Marchionne. 

On Jan 21, 2014, FIAT bought the remaining shares of Chrysler worth roughly $3.65 billion, which was owned by the United Auto Workers Voluntary Employee Beneficiary Association (VEBA) trust. 

Within days, FIAT announced it was renaming the new organization "Fiat Chrysler Automobiles".

Stellantis Plans for its Future

As now the world's fourth largest automaker by volume, Stallantis was formed as the auto makers around the world electrify their model lineups. It's expected that Stellantis will develop new electric models for Europe.

To start, FCA plans to modernize its factory in Poland to build hybrid and electric Jeeps, Fiats and Alfa Romeos, Automotive New Europe reported in December.

The vehicles will use PSA Group's Common Modular Platform (CMP). FCA plans to increase annual production at the Tychy plant to as many as 400,000 compact cars based on CMP architecture.

PSA has set a goal of having all-electric or hybrid powertrains on its entire model range by 2025, while FCA has committed to electrifying 30 of its models by 2022. Whether or not those plans will change remains unclear.

It's also expected that Stellantis will invest its 5 billion euro annual cost savings in other technologies such as autonomous driving, vehicle connectivity and other advanced mobility technology. 

"We are living through a profound era of change in our industry,'' Elkann said during a virtual shareholders' meeting. "We believe that the coming decade will redefine mobility as we know it. We and our merger partners at Groupe PSA are intent on playing a leading role in building this future. It is this intention that has brought us together."

Stellantis Chief Executive Carlos Tavares will hold a digital press conference on Tues, Jan 19 where he will outline the company's future.

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