JC68vert300
Senior Member
Fiat-Chrysler announced a proposed merger today. I wonder what that will do to the Chrysler and Dodge brands. The merger would focus on autonomous and electric vehicles. The future is bleak for the pleasure of driving.
FCA/Renault merger
- Thread starter JC68vert300
- Start date
If they use Renault engineering designs, you will not have to worry about pleasurable driving. Renault builds some of the worst cars on the planet and the concern will be if it will drive at all after about 30k.
Dave
The Official Press Release...
Fiat Chrysler Automobiles N.V. has today delivered a non-binding letter to the Board of Groupe Renault proposing a combination of their respective businesses as a 50/50 merger.
The FCA proposal follows initial operational discussions between the two companies to identify products and geographies where they could collaborate, particularly as they develop and commercialize new technologies. These discussions made clear that broader collaboration through a combination would substantially improve capital efficiency and the speed of product development. The case for combination is also strengthened by the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification and autonomous driving.
The proposed combination would create a global automaker, preeminent in terms of revenue, volumes, profitability and technology, benefitting the companies’ respective shareholders and stakeholders. The combined business would sell approximately 8.7 million vehicles annually, would be a world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis.
The benefits of the proposed transaction are not predicated on plant closures, but would be achieved through more capital efficient investment in common global vehicle platforms, architectures, powertrains and technologies. FCA has a history of successfully combining OEMs with disparate cultures to create strong leadership teams and organizations dedicated to a single purpose. Therefore, FCA’s Board strongly believes that this combination, which would have the scale, expertise and resources to navigate the rapidly changing automotive industry, would create new opportunities for employees of both companies and for other key stakeholders.
Under the terms of the proposal, shareholders in each company would receive an equivalent equity stake in the combined company. The combination would be carried out as a merger transaction under a Dutch parent company. The Board of the combined entity would initially be composed of 11 members, with the majority being independent and with equal representation of four members each for both FCA and Groupe Renault, as well as one nominee from Nissan. Further, there would be no carryover of existing double voting rights. However, all shareholders would have the opportunity to earn loyalty voting rights from the completion of the transaction under a loyalty voting program. The parent company would be listed on the Borsa Italiana (Milan), Euronext (Paris) and the New York Stock Exchange.
The benefits flowing from the combination of the two businesses would be shared, 50% by current FCA shareholders and 50% by current Groupe Renault shareholders. Before the transaction is closed, to mitigate the disparity in equity market values, FCA shareholders would also receive a dividend of €2.5 billion (see Appendix). In addition, prior to closing, there would be a distribution of Comau’s shares to FCA’s shareholders or an incremental €250 million dividend if the Comau spin-off does not occur.
Combining the businesses will bring together complementary strengths. The combination would create a brand portfolio that would provide full market coverage with a presence in all key segments from luxury/premium brands, such as Maserati and Alfa Romeo, to the strong access brands of Dacia and Lada, and would include the well-known Fiat, Renault, Jeep and Ram brands as well as commercial vehicles. Groupe Renault has a strong presence across Europe, Russia, Africa and Middle East, while FCA is uniquely positioned in the high margin segments in North America and is a market leader in Latin America. FCA’s evolving capability in autonomous driving, which includes partnerships with Waymo, BMW and Aptiv, is complemented by Groupe Renault’s decade of experience in EV technology where it is the highest selling EV OEM in Europe. Groupe Renault also has a well-established and profitable financing business (RCI Banque).
The combination would be highly value accretive for both FCA and Groupe Renault shareholders, delivering in excess of €5 billion of estimated annual run rate synergies, incremental to existing Alliance synergies. These synergies would arise principally from the convergence of platforms, the consolidation of powertrain and electrification investment and the benefits of scale. FCA estimates based on its experience, that approximately 90% of synergies would come from purchasing savings (~40%), R&D efficiencies (~30%), and manufacturing and tooling efficiencies (~20%). Included in these estimated savings would be the potential to reduce the combined number of vehicle platforms by approximately 20% and engine families by approximately 30%. The full run rate of estimated synergies is expected to be achieved by the end of year six following closing, with about 80% achieved in year four. Taking into account the impact of the approximately €3-4 billion in cumulative implementation costs, it is estimated that the synergies would be net cash flow neutral in year one and positive from year two onward.
Geographically, based on FCA and Groupe Renault’s 2018 global sales, the combined company would be #4 in North America, #2 in EMEA and #1 in Latin America and would have the increased resources necessary to grow its footprint in the APAC region. On a simple aggregated basis of 2018 results, the combined company’s annual revenues would be nearly €170 billion with operating profit of more than €10 billion and net profit of more than €8 billion.
While the proposal focuses on a combination of FCA and Groupe Renault, FCA looks forward – as part of a combined enterprise with Groupe Renault – to working with Groupe Renault’s Alliance partner companies on ways to create additional value for all Alliance members. FCA recognizes the standing and achievements of Groupe Renault’s partners and sees significant expected benefits to all parties from the expanded partnership. The FCA and Groupe Renault combination together with its Nissan and Mitsubishi partners would be the largest global OEM alliance, selling more than 15 million vehicles annually. The additional synergies stemming from the merger of FCA and Groupe Renault that are expected to accrue to Nissan and Mitsubishi purely as members of the Alliance are estimated to be worth an incremental €1 billion annually.
This proposal offers the opportunity to create the #3 global automotive company with broad, complementary and strong brand and geographic presence and important strengths in transforming technologies. It also confirms and enhances the value of the existing Alliance and its potential to become even stronger in the future. While there is no certainty that this proposal will result in a transaction, the Board of FCA has strongly supported and approved the proposal which will now be reviewed by the Groupe Renault Board of Directors. The definitive agreements for the proposed combination are subject to negotiation and to final review and approval by the FCA and Groupe Renault Boards. Completion of the proposed combination would also be subject to customary closing conditions, including approval by each company’s shareholders, as applicable, and the satisfaction of antitrust and other regulatory requirements.
Fiat Chrysler Automobiles N.V. has today delivered a non-binding letter to the Board of Groupe Renault proposing a combination of their respective businesses as a 50/50 merger.
The FCA proposal follows initial operational discussions between the two companies to identify products and geographies where they could collaborate, particularly as they develop and commercialize new technologies. These discussions made clear that broader collaboration through a combination would substantially improve capital efficiency and the speed of product development. The case for combination is also strengthened by the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification and autonomous driving.
The proposed combination would create a global automaker, preeminent in terms of revenue, volumes, profitability and technology, benefitting the companies’ respective shareholders and stakeholders. The combined business would sell approximately 8.7 million vehicles annually, would be a world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis.
The benefits of the proposed transaction are not predicated on plant closures, but would be achieved through more capital efficient investment in common global vehicle platforms, architectures, powertrains and technologies. FCA has a history of successfully combining OEMs with disparate cultures to create strong leadership teams and organizations dedicated to a single purpose. Therefore, FCA’s Board strongly believes that this combination, which would have the scale, expertise and resources to navigate the rapidly changing automotive industry, would create new opportunities for employees of both companies and for other key stakeholders.
Under the terms of the proposal, shareholders in each company would receive an equivalent equity stake in the combined company. The combination would be carried out as a merger transaction under a Dutch parent company. The Board of the combined entity would initially be composed of 11 members, with the majority being independent and with equal representation of four members each for both FCA and Groupe Renault, as well as one nominee from Nissan. Further, there would be no carryover of existing double voting rights. However, all shareholders would have the opportunity to earn loyalty voting rights from the completion of the transaction under a loyalty voting program. The parent company would be listed on the Borsa Italiana (Milan), Euronext (Paris) and the New York Stock Exchange.
The benefits flowing from the combination of the two businesses would be shared, 50% by current FCA shareholders and 50% by current Groupe Renault shareholders. Before the transaction is closed, to mitigate the disparity in equity market values, FCA shareholders would also receive a dividend of €2.5 billion (see Appendix). In addition, prior to closing, there would be a distribution of Comau’s shares to FCA’s shareholders or an incremental €250 million dividend if the Comau spin-off does not occur.
Combining the businesses will bring together complementary strengths. The combination would create a brand portfolio that would provide full market coverage with a presence in all key segments from luxury/premium brands, such as Maserati and Alfa Romeo, to the strong access brands of Dacia and Lada, and would include the well-known Fiat, Renault, Jeep and Ram brands as well as commercial vehicles. Groupe Renault has a strong presence across Europe, Russia, Africa and Middle East, while FCA is uniquely positioned in the high margin segments in North America and is a market leader in Latin America. FCA’s evolving capability in autonomous driving, which includes partnerships with Waymo, BMW and Aptiv, is complemented by Groupe Renault’s decade of experience in EV technology where it is the highest selling EV OEM in Europe. Groupe Renault also has a well-established and profitable financing business (RCI Banque).
The combination would be highly value accretive for both FCA and Groupe Renault shareholders, delivering in excess of €5 billion of estimated annual run rate synergies, incremental to existing Alliance synergies. These synergies would arise principally from the convergence of platforms, the consolidation of powertrain and electrification investment and the benefits of scale. FCA estimates based on its experience, that approximately 90% of synergies would come from purchasing savings (~40%), R&D efficiencies (~30%), and manufacturing and tooling efficiencies (~20%). Included in these estimated savings would be the potential to reduce the combined number of vehicle platforms by approximately 20% and engine families by approximately 30%. The full run rate of estimated synergies is expected to be achieved by the end of year six following closing, with about 80% achieved in year four. Taking into account the impact of the approximately €3-4 billion in cumulative implementation costs, it is estimated that the synergies would be net cash flow neutral in year one and positive from year two onward.
Geographically, based on FCA and Groupe Renault’s 2018 global sales, the combined company would be #4 in North America, #2 in EMEA and #1 in Latin America and would have the increased resources necessary to grow its footprint in the APAC region. On a simple aggregated basis of 2018 results, the combined company’s annual revenues would be nearly €170 billion with operating profit of more than €10 billion and net profit of more than €8 billion.
While the proposal focuses on a combination of FCA and Groupe Renault, FCA looks forward – as part of a combined enterprise with Groupe Renault – to working with Groupe Renault’s Alliance partner companies on ways to create additional value for all Alliance members. FCA recognizes the standing and achievements of Groupe Renault’s partners and sees significant expected benefits to all parties from the expanded partnership. The FCA and Groupe Renault combination together with its Nissan and Mitsubishi partners would be the largest global OEM alliance, selling more than 15 million vehicles annually. The additional synergies stemming from the merger of FCA and Groupe Renault that are expected to accrue to Nissan and Mitsubishi purely as members of the Alliance are estimated to be worth an incremental €1 billion annually.
This proposal offers the opportunity to create the #3 global automotive company with broad, complementary and strong brand and geographic presence and important strengths in transforming technologies. It also confirms and enhances the value of the existing Alliance and its potential to become even stronger in the future. While there is no certainty that this proposal will result in a transaction, the Board of FCA has strongly supported and approved the proposal which will now be reviewed by the Groupe Renault Board of Directors. The definitive agreements for the proposed combination are subject to negotiation and to final review and approval by the FCA and Groupe Renault Boards. Completion of the proposed combination would also be subject to customary closing conditions, including approval by each company’s shareholders, as applicable, and the satisfaction of antitrust and other regulatory requirements.
GJS
Senior Member
Fantastic. As if Fiat-Chrysler wasn't hard enough to say without feeling dirty .. Saying "Renault-Fiat-Chrysler" ... it's like chewing glass.
Hey, Renault would get Jeep back!!!
I would feel more positive if Nissan were a part of the deal too. The others scare me. I doubt the brass at Chrysler in Michigan had anything to do with this. More like the Elkans that own FCA wanted to cash in on their good fortune that FCA has achieved now and just keep Ferrari as their money making gem to simplify their lives and yet keep sufficient revenue coming in from Ferrari to maintain their lifestyles.
I agree Steve. Definitely an Agnelli Family move. With a 43% stake in Nissan soon to be come a 21.5% stake it remains to be seen how the Alliance will move forward. It would give us access to small car options which we currently have walked away from which may or may not be a good thing. However I do not anticipate much change for us here in North America.
300rag
It's Not Going to Shift Itself
Where's the non spin-doctor version?
Well here is what Dealers got.....
To Our Dealer Colleagues,
Today, Fiat Chrysler Automobiles announced it has proposed a 50/50 merger with Groupe Renault in a bold step that will dramatically change both companies and the automotive industry.
The merger will create a preeminent global automotive group at a time of unprecedented transformation in the industry. The new company – which will be named at a later date – would have worldwide annual sales of nearly 9 million vehicles and a broader and more balanced global presence than either company on a standalone basis.
I want to stress, we are only in the beginning stages and there is no certainty that this proposal will result in a transaction, but if successful, we expect this entity would be a world leader in EV technologies as well as premium brands, SUVs, pickup trucks and light commercial vehicles.
It is important to note, the benefits of the proposed transaction are not predicated on plant closures but would be achieved through more capital-efficient investments in common global vehicle platforms, architectures, powertrains and technologies.
In Groupe Renault, we found a like-minded partner who sees the future as we do. What started as initial operational discussions around greater collaboration evolved into discussions about a merger, as we recognized the enormous potential benefits for both companies that would result from bringing these businesses together. The benefits that would accrue from a combination of Groupe Renault and FCA, we believe, would also extend to the Alliance partners – Mitsubishi and Nissan – and we look forward to engaging with them.
In our mind, this proposed merger has the potential to add value across the board – for FCA, Groupe Renault and all our stakeholders as well as for the Alliance partners. It will also signal to the sector what can be achieved if one is bold – and to that end, while there is no certainty of a deal, we aim to move as quickly as possible to secure a final agreement with Groupe Renault. Our Board has strongly supported the proposal which will now be reviewed by the Groupe Renault Board of Directors.
For now, nothing has changed and it is business as usual at FCA.
If I were to bet on this merger, I think Fiat management and ownership has decided to spread their risk. The Chrysler division produces lots of Ram trucks and jeeps, which are the company's bread and butter. The sales of these vehicles always tanks whenever gas prices surge or the economy slows down. When that happens again, as everyone knows it will, Chrysler is going to bleed lots of cash until conditions improve. Small cars tend to sell when the market is soft or gas prices are high. Trouble is, most of the small car offerings by Fiat or Renault are not quality automobiles and do not sell in the US market. The Fiat/Chrysler joint effort to produce the modern Dodge Dart is a good example, the Dart only lasted 3 years and had a bad reputation for reliability, especially when equipped with the Fiat 1.4 turbo engine. This a probably an *** covering merger by Fiat as sales are starting to show some weakness and the default rate on auto loans has been inching up over the last year or so. We are starting to see some deep discounts and incentives on the asking price for new vehicles which is another sign of a weakening market.
Dave
Old Mike
Well-Known Member
I don’t see any reason to be optimistic. The Germans did nothing but siphon off Chrysler profits and the only thing of any value Chrysler got in return was the independent rear end that is in the 300, Charger, and Challenger today. And it looks to me like the Italians are only using Chrysler to re-establish a place for their brands in the American market (they were a weak player the first time they were here and couldn’t survive). Consider the recent Alpha Romeo marketing blitz, while at the same time there was next to nothing to promote Chrysler. Add to that, killing off products like the 200 and Dart instead addressing the issues they had. They could have been competitive. Meanwhile, while there’s a Lancia badged 300 in Europe, they’re letting Chrysler wither here. Ram trucks and Jeep are still making money, so they’re happy with that. It just seems to me that its a matter of when, not if, that they’ll kill the Chrysler brand.
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Rwc
Senior Member
Maybe the new entity will sell off dodge, Chrysler and Jeep so they can focus on all their incredible European **** boxes. It would be great if some venture capitalists wanted to actually make Chrysler an American company again.
That might well happen on an auto market downturn. The Obummer administration set up the sale of Chrysler to Fiat as part of the last bailout. Since Chrysler then became a foreign owned company, no need for future government bailouts. It may go bust and someone here in the US could scoop up the assets, get rid of the underfunded auto workers pension and start Neo-Chrysler or whatever they choose to call it and be highly competitive. Might also just lead to the forced sale of the assets and Chrysler would just disappear, no way to know really.
Dave
Old Mike
Well-Known Member
Ugh! Just imagine driverless electric cars that look like that. Can’t wait.
Rwc
Senior Member
The company that created the mouse and the LeCar working together. Good luck!
President Obama could have let Chrysler collapse, but instead he took the only offer to buy them, Fiat, instead, as recommended by the team addressing these issues at the time. That preserved a lot of jobs that got us through some hard times and the whole bail out did do what was intended (what I didn't like about the bail out was that a lot of bank CEOs didn't go to jail for their evil charades). And under the supervision of Sergio and the Fiat owners, they saved the company from permanent failure and FCA actually has now prospered and made a lot of strong brands and very good quality cars since them. If this would have happened under a Trump administration, I believe he would have done the same thing to preserve a lot of American jobs. Anything else would have been stupid if you care about U.S. jobs and our long term prosperity.
The real problem with making small cars for a "big three" "U.S. company" anymore is that the Japanese manufacturers have making them down to a fine art and have successfully cornered that part of the market through consistently making durable/reliable cars over many years. To make a competitive car to theirs these days by a "Big three" manufacturer is all but impossible and sell at a profit, especially in the face of a sharply decreasing market segment. Even the Japanese are being squeezed due to sharply reduced volumes.
Old Mike
Well-Known Member
Noioso. Italian for boring
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