MILAN -- Shareholders of Fiat Chrysler and PSA Peugeot voted Monday to merge and create the world's fourth-largest auto company which, its architects hope, can more readily take on a technological shift in the industry.
Addressing separate meetings, PSA Peugeot Chief Executive Officer Carlos Tavares and Fiat Chrysler Chairman John Elkann spoke of the "historic" importance of the merger. Tavares will run the new company, while Elkann stays on as chairman.
The only real hurdle left to closing the deal is listing shares of the new company, to be called Stellantis. The companies expect it to be finalized Jan. 16, with shares in the combined company trading on Jan. 18 in Milan and Paris and Jan. 19 on the New York Stock Exchange. Fiat Chrysler shares rose 0.55% in New York on Monday, while Peugeot rose 1.7% in Paris.
Fiat Chrysler announced Monday that its stockholders as of Jan. 15 will get a special cash payment worth $2.26 per common share after the merger closes. The payments will cost $3.56 billion.
The new company will have the capacity to produce 8.7 million cars a year, behind Volkswagen, Toyota and Renault-Nissan, and the merger is expected to result in $6 billion in annual savings.
The marriage of the Italian-American and French rivals is built on the promise of cost savings in the capital-hungry industry during a technological shift to electrified powertrains and autonomous driving. But what remains to be seen is if it will be able to preserve jobs and heritage brands in a global market still suffering from the pandemic.
"Together we will be stronger than individually," Tavares told a virtual gathering of shareholders. "The two companies are in good health. These two companies have strong positions in their markets."
The new company will put together French mass-market carmakers Peugeot and Citroen, top-selling Jeep, and Italian luxury and sports brands Maserati and Alfa Romeo -- pooling brands with histories spanning from 75 to more than 120 years with strong emotional pull in their home markets.
"We are living through a profound era of change in our industry," said Elkann, heir to the Fiat-founding Agnelli family and Fiat Chrysler's biggest shareholder. "We believe that the coming decade will redefine mobility as we know it."
While the deal is billed as a merger of equals, the power advantage goes to PSA, with Tavares running Stellantis and holding the tie-breaking vote on the 11-seat board. Tavares is set to take control of the company early this year, possibly by the end of January.
Fiat Chrysler CEO Mike Manley will head North American operations, which is key to Tavares' longtime goal of getting a U.S. foothold for the French carmaker he has run since 2014, and the clear money-maker for Fiat Chrysler.
Manley said about 40% of the savings will come from combining platforms, the underpinnings of vehicles, and engines and transmissions. Another 35% of the savings will come from joint purchasing, especially with electric and high-tech components, he said, while 7% will come from sales, general and administrative cost savings.
The companies will get the rest of the savings in other areas including logistics, supply chain, quality and parts sales, he said.
"We feel confident that this integration can be achieved as both companies have previously gone through significant business combinations," Manley said. "And by virtue of successful execution, they have both emerged stronger from each of them."
Such a deal was long wanted by Fiat Chrysler's longtime CEO Sergio Marchionne, who had predicted the necessity of consolidation in the industry. He was unable to find a deal before his sudden death in July 2018.
Information for this article was contributed by Angela Charlton of The Associated Press.
