Stellantis Is Set to Be the World’s Fourth-Largest Car Maker. Italy May Want a Piece - Barron's

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Italy may want to take a stake in the company created by a merger between Fiat Chrysler and Peugeot.

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The merger between Fiat Chrysler Automobiles and Peugeot was approved by both companies’ shareholders on Monday, paving the way for the completion of a deal that will create the world’s fourth-largest car maker, called Stellantis. Now an Italian government minister has signaled that the country home to Fiat may want to take a stake in the new automobile giant.

Shares in both companies were just above flat in European trading on Wednesday, stabilizing after both stocks rallied more than 10% in the past month.

The back story. The European Commission’s regulatory approval of the merger between Fiat Chrysler (ticker: FCAU) and Peugeot (UG.France) in December left Monday’s shareholder vote as the final hurdle in creating the new company.

With more investors in both groups welcoming the merger, the deal is set to complete on Jan. 16. Stellantis’ stock should begin trading in Paris and Milan on Jan. 18, with shares debuting on the New York Stock Exchange on Jan. 19.

The combined company will bring together storied European and American car brands, merging fleets of Fiat, Chrysler, and Jeep with Peugeot, Vauxhall, and Citroën to produce around 8.7 million units a year. The $52 billion merger, in the works since 2019, will give both companies’ shareholders equal control of a group that expects to see €5 billion ($6.2 billion) in annual cost-saving synergies.

Also read:Fiat Chrysler and Peugeot Are Merging. French Cars Will Be Coming to the U.S.

What’s new. Italian deputy economy minister Antonio Misiani told newspaper La Repubblica on Wednesday that Italy should not rule out taking a stake in Stellantis when the merger completes.

Misiani said that any investment should be made in a consensual way, and drew parallels between possible state involvement in Stellantis with the French government’s interest in Peugeot. France, through public bank BPI France, will hold a 6.2% stake in Stellantis once the deal is completed.

Italy is home to Fiat, where the cars are made, as well as the company’s founding Agnelli family, which controls nearly 47% of Fiat Chrysler. Misiani said that there is a national interest in Stellantis from an employment and industrial perspective.

Plus:EU and China Have Agreed on a Landmark Investment Deal That Could Go Against Biden’s Priorities

Looking ahead. An Italian-state stake in Stellantis could see Italy emerge as the most dominant national interest in the new trans-Atlantic company. The Agnelli family will own 14.4% of Stellantis through its holding group, Exor (EXO.Italy), and the family’s scion John Elkann will be the new company’s chair.

Both Fiat Chrysler and Peugeot are weak in China, and successful expansion in the world’s largest car market is viewed by analysts as critical to Stellantis’ success. If Italy joins France in taking a state interest in the auto giant, it would come as European investors are cozying up to China. The European Union and China agreed late last year on a landmark investment treaty liberalizing market access for both groups.

Email: editors@barrons.com

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