Car manufacturers PSA (Peugeot, Citroën) and Fiat Chrysler, in the process of merger, announced Wednesday evening that they were waiving the payment of an ordinary dividend of 1.1 billion euros each planned as part of this operation in because of the coronavirus crisis.
The board of directors of Fiat Chrysler (FCA) and the management board of Peugeot SA (PSA) "today each decided not to distribute an ordinary dividend in 2020 linked to the 2019 financial year, in the light of the impact of the current Covid-19 crisis, "they said in a joint statement.
Announced at the end of October and supposed to be finalized at the beginning of 2021 at the latest, the PSA-FCA merger should give birth to the world number 4 in the automobile industry, housing under the same roof emblematic brands such as Peugeot, Citroën, Jeep, Alfa Romeo and Maserati.
Marriage not questioned
The transaction approved by the two partners in December provided for the distribution of an ordinary dividend of 1.1 billion euros to their respective shareholders for 2019. However, the cancellation of the dividend does not call into question this marriage between equals, both groups say.
In their joint text released Wednesday evening, "FCA and PSA group confirm that preparations for the 50/50 merger of their activities (...) are progressing well, especially with regard to antitrust and other regulatory filings". "The completion of the proposed merger must take place on schedule, before the end of the first quarter of 2021, subject to the usual conditions of completion," they add. Many companies have announced in recent weeks a sharp reduction or cancellation of their dividends in order to preserve their liquidity in the context of the historic economic crisis caused by the Covid-19 pandemic.
Question on the exceptional dividend within the framework of the merger agreement
The two groups, however, did not comment on the exceptional dividend that each planned to pay, still under the merger agreement. FCA is supposed to distribute an exceptional dividend of 5.5 billion euros, while PSA must pay its shareholders its 46% stake in the capital of the French equipment manufacturer Faurecia.
This arrangement raises questions because it now seems clearly to the advantage of FCA shareholders. Faurecia's market capitalization has indeed shrunk by almost 40% since the announcement of the engagement, so that the value of PSA's participation has decreased by almost one billion euros. The PSA general shareholders' meeting originally scheduled for May 14 has been postponed to June 25.
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