World’s fourth-largest carmaker rallies on first day of commerce after $52 billion merger
Flag with the Stellantis logo on the front entrance to FCA’s Mirafiori plant on January 18, 2021 in Turin, Italy.
Stefano Guidi | Getty Images
LONDON — Stellantis, the product of the $52 billion merger between Fiat Chrysler Automobiles and Peugeot, was well received by European investors on its first day of trading Monday.
Shares of the world’s fourth-largest carmaker by volume, created after the merger was finalized on Saturday, climbed 7.5% by afternoon trade following its launch on stock exchanges in Milan and Paris.
The Milan-listed shares started trading at 12.758 euros per share with a market cap of 39.2 billion euros ($47.3 billion), and by afternoon deals in Europe were up at 13.55 euros per share.
In a virtual launch on the Borsa Italiana website, Stellantis CEO Carlos Tavares, former CEO of PSA Group, said the merger would add 25 billion euros in value to shareholders over the coming years due to projected cost cuts.
“All of our employees and our management teams are totally focused on the value creation that is embedded on the merger of FCA-PSA and the creation of Stellantis,” he added.
Chairman John Elkann said the coming decade would likely “redefine mobility as we know it.”
“We have the scale, the resource, the diversity and the knowledge to successfully capture the opportunity of this new era in transportation,” he said.
“Our ambition is to build something unique, something great, by providing our customers with distinctive, safe, convenient, innovative and sustainable vehicles and mobility services.”
The stock will launch in New York when Wall Street opens on Tuesday, with U.S. markets closed Monday for a public holiday, after which Tavares will hold his first press conference as Stellantis CEO.
The launch marked the culmination of tie-up talks that began in late 2018, and comes as the auto industry seeks to navigate a seismic shift in consumer demand toward electric vehicles.
Ahead of the deal, S&P Global Ratings upgraded FCA’s credit rating, predicting that Stellantis would benefit from increased scale and geographical diversity and a strong capital structure.
“The combined entity will have a solid balance sheet, good free cash flow prospects and large liquidity buffer,” S&P analysts Vittoria Ferraris and Margaux Pery said in a note.
“In our base case, Stellantis’ net cash position will hover at about €14 billion on an unadjusted basis. This will provide the group with a considerable buffer to market conditions, which remain exposed to COVID-19-linked mobility restriction risks during the first half of 2021, and could suffer from the gradual reduction of government support.”