Carlos Tavares, PSA (left) and Mike Manley, FCA, following the signing of the merger agreement.

The pandemic is forcing FCA and PSA to reduce the size of the dividend to be paid to FCA shareholders, primarily the Agnelli family, when the merger is finished at the end of the first quarter of 2021 despite savings generated from the combination of the two companies.

The two companies said in a statement that “as a result of the significant progress made by the joint workstreams over the past months, the estimated annual run-rate synergies from the creation of Stellantis have been significantly increased to in excess of 5 billion euros ($5.92 billion), from the 3.7 billion euros ($4.38 billion) originally estimated.”

The total estimated one-time implementation cost of achieving these synergies has also increased from 2.8 billion euros, or $3.32 billion, to a figure of up to 4 billion euros, or $4.74 billion. Specifically, the special dividend to be distributed by FCA to its shareholders before closing is set at 2.9 billion euros, more than $3.5 billion. The special dividend had been estimated at 5.5 billion euros, or $6.51 billion, when the merger was announced.

(FCA, PSA pick name for post-merger company: Stellantis.)

Fiat Chrysler and Groupe PSA have selected a new name for the merged company: Stellantis.

Meanwhile Groupe PSA’s 46% stake in Faurecia will be distributed to all Stellantis shareholders promptly after closing following approval by the Stellantis Board and shareholders, the two companies said in a joint statement.

Carlos Tavares, chairman of the Managing Board of Groupe PSA, said: “With this new decisive milestone, we are moving all together towards our goal in the best possible condition with even greater prospects for Stellantis. I would like to take this opportunity to warmly thank the teams who have built reciprocal relations of trust, including during the COVID-19 confinement.

“The human factor is at the heart of the dynamic of such a project, together with the support of our shareholders who have once again demonstrated their commitment to the creation of Stellantis,” he added.

(FCA, PSA formally lock merger into place.)

Additionally, the two sides agreed to consider a potential distribution of 500 million euros to the shareholders of each company before closing or, alternatively, a distribution of 1 billion euros to be paid following the closing to all Stellantis shareholders.

After the FCA and PSA merger, John Elkann is expected to keep his role as chairman.

Which choice will be made depends upon the performance and forecasts for the two automakers as well as market conditions during that time. Both boards must approve any distribution, the two sides noted.

FCA and Groupe PSA said the economic terms of their Combination Agreement signed in December remain unchanged and that completion of the proposed combination is expected to take place by the end of the first quarter of 2021. The boards are “more than ever convinced” of the logic and extraordinary value creating potential of their merger, the companies said.

(PSA-FCA plan to retain all brands after merger.)

“Stellantis can leverage from the outset a strongly diversified business with high margins in its core regions of Europe, North America and Latin America and a unique portfolio of well-established and iconic brands. Its best-in-class products, delivering high customer satisfaction, cover all key industry segments. Just as importantly, the new company, with its much greater combined scale, will be equipped to accelerate the development of highly innovative mobility solutions and cutting-edge technologies in new energy vehicles, autonomous driving and connectivity,” the statement said.

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