If there’s one phrase that makes Jeep, Dodge, Chrysler and/or Ram fans sweat a little—if not immediately feel a bit of vomit rise up in their throat—it’s definitely “merger of equals.” Chrysler’s so-called “merger of equals” with Mercedes-Benz parent company Daimler was such a flop that it’s become a cautionary tale about culture clashes in business.
Now, just 13 years after that highly unequal merger of equals failed spectacularly, that phrase appeared in the most unsettling place possible place: in recently filed documents concerning Fiat Chrysler Automobiles’ upcoming merger with Peugeot parent company Groupe PSA.
According to documents obtained by Automotive News, what’s being described as a (shudder) merger of equals is technically a purchase by PSA of FCA for accounting purposes. That crucial detail was disclosed in a prospectus filed by FCA with Euronext Paris and Mercato Telematico Azionario in order to list shares of the new merged FCA-PSA entity, Stellantis, on those two stock exchanges. The same document was also filed with the United States Securities and Exchange Commission.
The prospectus outlined several things to back up PSA’s purchase, namely, that six of the 11 Stellantis board directors will be appointed by PSA, PSA shareholders will pay a pre-merger premium, and current Groupe PSA CEO and president of its managing board Carlos Tavares will serve as Stellantis’ first CEO. The initial Stellantis board terms will last four years, and Tavares has a five-year term as Stellantis’ CEO.
The Agnelli family, who is currently the largest shareholder in FCA, will still have the largest share of Stellantis after the merger at 14.4% of the merged entity, Automotive News notes. However, the second, third and fourth largest shareholders—the Peugeot family, the French government and Dongfeng—will have a combined 19% of Stellantis.
There is one part where FCA is taking, the lead, however. FCA’s Dutch holding company, FCA N.V. will also absorb the PSA Group from a legal standpoint and take on the name Stellantis N.V.
“We have decided together on the most efficient financial and legal foundations to build Stellantis in the long term,” read a PSA statement quoted by Automotive News.
Between the who’s-purchasing-who details and that phrase popping back up, it’s hard not to be concerned that FCA will be the lesser “equal” in this deal, not unlike pre-FCA Chrysler was within DaimlerChrysler. “Merger of equals,” as Automotive News notes, isn’t a legal, binding term.
To say that the DaimlerChrysler era isn’t remembered fondly is a massive understatement. Daimler’s executives quickly established dominance over Chrysler’s. Automotive News did an oral history of the original merger of equals era here that’s worth the read. Daimler’s co-CEO lighting up a cigarette in his office on the first day—against Chrysler’s no-smoking policy—and then singlehandedly declaring the floor he shared with Chrysler’s co-CEO a smoking floor captures the vibe pretty well.
The DaimlerChrysler era resulted in cost-cutting measures that decimated the Chrysler side, cheapening interior materials, axing competitive features and resulting in some truly steaming turds like the Dodge Avenger and the original Jeep Compass.
However, the future Stellantis group maintains that this time it will be different.
“As we have always made clear, Stellantis will be the result of a 50:50 combination of FCA and Groupe PSA,” an FCA spokesman told Automotive News.
Godspeed, you two wacky companies. Just don’t crank out Playskool-esque interiors and decades-old four-speed transmissions to prop up the European half this time.
You can read the full prospectus on FCA’s website here.
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