Fiat Chrysler, Peugeot’s Merger Faces a Rocky Road to Success

By Eric Sylvers Oct. 31, 2019 9:38 am ET MILAN— Fiat Chrysler Automobiles FCAU 4.04% NV and Peugeot PUGOY -13.18% maker PSA Group unveiled their $50 billion merger on Thursday. Making it work in an industry littered with unsuccessful mergers will be the hard part.

Under the deal announced Thursday, which confirmed a report by The Wall Street Journal, the shareholders of each company will own 50% of the new entity. Fiat Chrysler’s John Elkann will retain his role as chairman and Peugeot Chief Executive Carlos Tavares will be CEO. “Great on a spreadsheet, but tricky to execute,” Jefferies analyst Philippe Houchois wrote about a potential Fiat Chrysler-Peugeot deal before the announcement. He nevertheless called the logic underpinning the deal “overwhelming.”

In the face of fierce political opposition, Mr. Marchionne, who died last year, closed one relatively small Italian factory. Instead of further closures, he relied—as many large Italian companies do—on temporary layoff schemes largely paid for by the government. Fiat Chrysler shares traded 9% higher on Thursday, while Peugeot’s stock sank 13%, indicating investors in the Italian-American car maker were perceived to have gotten the better deal. Fiat Chrysler shares had already jumped 9.5% Wednesday, after the Journal first reported the companies were in talks. Peugeot shares had risen 4.5% Wednesday.

how did Daimler/Chrysler work out?

Italian quality standards meet French labor productivity...what could possibly go wrong?

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