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PSA wants to merge with FCA. Highlights a nearly $20 billion net cash chest

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AlexB

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FCA end 2018 with net cash for the first in the Fiat and Chrysler marriage , and post MM Sale will be pushing near $8 billion net cash even with paying a special dividend.

Add PSA's $10.2 billion net cash + this year (likely) profitability and get a merge FCA-PSA (assuming an ALL STOCK MERGER) with nearly $20 billion in Net cash-pretty much the best for any Automaker that's not called Toyota.

The French maker of Peugeot, Citroen and Opel cars is seeking a deal that will expand its footprint outside of Europe, according to people familiar with the matter. Tavares has met with advisers to consider potential collaborations or mergers, said the people, who asked not to be identified because the matter is private.


The deliberations are very preliminary and potential targets haven’t recently been approached, the people said. Fiat Chrysler Automobiles NV is attractive to PSA for its exposure to the U.S. and its premium Jeep brand, but Tavares also sees General Motors Co. as a good fit and Jaguar Land Rover as a possibility, the people said, while cautioning that such deals would be difficult to reach.

A spokesman for PSA declined to comment on any specific plans, declined to make Tavares available ahead of the Geneva car show this week. He referred to the CEO’s comments at an earnings press conference last week, when Tavares, asked about plans for about 9 billion euros ($10.2 billion) in net cash, said that strategic opportunities were “open for discussion,” while cautioning the money would also help in a downturn.


“We think we are in a good position both in terms of running the operations and also in terms of strategic vision” with regard to electrification, autonomous driving and mobility, Tavares said on Feb. 26. “We have done our homework, and we think we are on the right path.”

A deal would also help PSA build scale. The French company sold 3.9 million cars last year, enough to qualify as a volume producer but nowhere near the 10 million-plus that VW, Toyota Motor Corp

Italian American carmaker Fiat Chrysler is focused on steadying the management team and operations since former CEO Sergio Marchionne passed away in July, the people said. It hasn’t held any recent discussions with PSA regarding a combination, they said. Fiat and Peugeot extended their van cooperation to include vehicles under the French manufacturer’s Opel and Vauxhall brands in February.
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www.bloomberg.com

Peugeot Owner's CEO Said to Seek Deals After Reviving Europe

PSA Group is too small to satisfy the global ambitions of Chief Executive Officer Carlos Tavares.
www.bloomberg.com www.bloomberg.com

Thoughts? This will likely be one of the main media questions for Manley in Geneva.
 
I'm up for such a merger. I saw just yesterday that (apparently) Opel has turned a profit for the first time in 20 years (thanks to being sans-GM).
 
I'd think FCA already has everything PSA could offer. It would be PSA raiding the FCA parts bin and potentially, their piggy bank. No thanks!
 
FCA might be looking for partners for specific projects—not for full-on merger partners. Don’t see this happening. PSA is just looking for buzz after the Carlos Gozen debacle.
 
A strategic partnership on a specific vehicle or region would be good, anything else is just taking their eye off their current plan which is finally producing results. FCA should stay the course and only look for specific partnership opportunities. I can see FCA emerging from the next economic downturn as a major force in the market while some of the current OEM's take a very large hit to their business.
 
Freshforged said:
FCA might be looking for partners for specific projects—not for full-on merger partners. Don’t see this happening. PSA is just looking for buzz after the Carlos Gozen debacle.
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Wrong French Automaker
Carlos Ghosn is Renault.
Carlos from PSA was Renault's number 2 and got tried of Ghosn so he left for PSA.
 
Mopar426 said:
I'd think FCA already has everything PSA could offer. It would be PSA raiding the FCA parts bin and potentially, their piggy bank. No thanks!
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PSA's piggy back is bigger than FCA.
 
GasAxe said:
A strategic partnership on a specific vehicle or region would be good, anything else is just taking their eye off their current plan which is finally producing results. FCA should stay the course and only look for specific partnership opportunities. I can see FCA emerging from the next economic downturn as a major force in the market while some of the current OEM's take a very large hit to their business.
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The one caveat is a deal will provide (in a strangle way) certainly (to Wall Street) about Europe, and PSA provides the ability to have another profit center besides "Chrysler"/North America in by creating a European Business that makes $8-$10 billion EBIT annual having a first-ever real Trans-Atlantic Automaker.

Plus in addtion it would be the first version of "Mopar" that overtakes GM (as well Hyundai-Kia) Globally as the World's third largest Automaker (depending on how you count/figure out Renault-Nissan relationship).
 
AlexB said:
Wrong French Automaker
Carlos Ghosn is Renault.
Carlos from PSA was Renault's number 2 and got tried of Ghosn so he left for PSA.
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Oops—thanks for the correction. ?
 
Some of the Fiat brand cars could do with partnering the Peugoet brand vehicles. This could give them better scale to challenge VW in Europe where apart from the A-segment Fiat is weak. Both are and are likely to remain weak in Asia though.

Getting into the US seems crucial for PSA right now. This can give FCA some solid bargaining power.
 
AlexB said:
PSA's piggy back is bigger than FCA.
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PSA has certainly a larger support from their Government in comparison to FCA. That helps a lot in a time of crisis.
 
Would this be mostly in Europe? I'd imagine PSA would like help breaking into the US market, which FCA could do. As long as none of our brands are compromised, I don't have a problem with it.
 
AlexB said:
The one caveat is a deal will provide (in a strangle way) certainly (to Wall Street) about Europe, and PSA provides the ability to have another profit center besides "Chrysler"/North America in by creating a European Business that makes $8-$10 billion EBIT annual having a first-ever real Trans-Atlantic Automaker.

Plus in addtion it would be the first version of "Mopar" that overtakes GM (as well Hyundai-Kia) Globally as the World's third largest Automaker (depending on how you count/figure out Renault-Nissan relationship).
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I don't know the Euro-side of FCA well enough, but I wouldn't the PSA brands worth having be too much of a rival to the Fiat brand? It strikes me as the same flavor of a GM - Chrysler partnership in NA; too closely related resulting in brands being shuttered.

Plus after the Fiat NA re-introduction debacle, I doubt many NA dealers will want to invest in selling another niche contemporary european brand.
 
GasAxe said:
I don't know the Euro-side of FCA well enough, but I wouldn't the PSA brands worth having be too much of a rival to the Fiat brand? It strikes me as the same flavor of a GM - Chrysler partnership in NA; too closely related resulting in brands being shuttered.

Plus after the Fiat NA re-introduction debacle, I doubt many NA dealers will want to invest in selling another niche contemporary european brand.
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Fair points all around, and I hope Manley would scrap such plans, maybe use the Chrysler brand to sell some Peugeot models that are not traditional sedan tophat.

Two counter points to the multiple brands being to closely case is VW who FCA-PSA European market share would be similar. VW has two brands that starts with "S" that are like the VW Brand (itself) in market position. The other is PSA (GM paying PSA to take Opel) having Opel kind of proves mutiple brands can work (so far), especally given European nationalism together with the Asian Automakers not having the same level of sucess they have enjoyed in North America leaves more room for the "Home" brands.
 
I royally doubt Europe wants a bunch of badge engineered French cars with Fiat badges (that they can already buy, with the French badge) and north America certainly doesn't - what a great way to put the final nail in Chrysler though. This tie up would be a huge money loser all around. Thankfully FCA is smart enough to not do it.
 
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