Fiat Chrysler-PSA deal likely to bring fewer brands, models – Daily News

on Nov1
by | Comments Off on Fiat Chrysler-PSA deal likely to bring fewer brands, models – Daily News |

Automobile shoppers across the globe are likely to see fewer vehicles and brands if the merger of Fiat Chrysler and France’s PSA goes through, but the new company will be big enough to compete in a fast-changing business that requires vast sums of money to develop autonomous and electric vehicles.

The two companies announced the merger Thursday that, if finalized, will create the world’s fourth-largest auto company worth $50 billion. But PSA will have the upper hand in the deal, with its cost-cutting CEO Carlos Tavares in charge and PSA controlling the new company’s board.

Both companies still have to agree on final provisions, but the deal could close by the end of the year.

Tavares, who used to run Nissan in the Americas and knows the U.S. market well, will not shy away from trimming unprofitable models and brands. He’s credited with turning around the Opel and Vauxhall brands in Europe, perennial money losers which PSA acquired from General Motors two years ago.

Bernstein analyst Max Warburton wrote in a note to investors that he’s confident Tavares can pull off combining the companies.

“Tavares’ playbook has been to take on loss-making businesses and fix them, rapidly,” Warburton wrote. “We believe he can achieve something similar at Fiat in Europe.” He called Tavares the “world’s most frugal auto executive.”

Fiat Chrysler CEO Mike Manley was left without a title in the combined company. He’ll take a senior leadership position, the companies said, but his role in the new business was not immediately clear. Tavares will hold the 11th seat on the new company’s otherwise evenly split board, giving control of it to PSA, although Fiat Chrysler’s chairman, John Elkann, will become chairman of the new company.

Before the deal closes, FCA will pay its shareholders a 5.5 billion euro ($6.1 billion) premium, raising questions about whether the new company will be saddled with too much debt. Jeffries analyst Philippe Houchois estimated that Peugeot is paying a hefty 32% premium to take control of Fiat Chrysler.

US stocks close broadly lower on new US-China trade jitters

Stocks closed broadly lower on Wall Street Thursday after investors got spooked by a published report that cast doubt on the prospects of a long-term U.S-China trade deal.

Bond prices surged, sending yields sharply lower, as traders turned cautious. The sell-off was a marked shift from a day earlier, when the S&P 500 notched its second all-time high this week.

The S&P 500 index fell 9.21 points, or 0.3%, to 3,037.56. The benchmark index is on track for its fourth-straight weekly gain and is now up 21.2% this year.

The Dow Jones Industrial Average dropped 140.46 points, or 0.5%, to 27,046.23. It had briefly slumped 268 points.

The Nasdaq slid 11.62 points, or 0.1%, to 8,292.36. The Russell 2000 index of smaller company stocks lost 10.40 points, or 0.7%, to 1,562.45.

Financial stocks also took heavy losses as bond yields made a significant move lower. The yield on the 10-year Treasury fell to 1.69% from 1.79% late Wednesday.

Yields were already falling in the early going and were given an extra shove lower following a surprisingly weak survey on business activity in the Midwest. A separate report showed that U.S. consumer spending ticked up last month, though it came in below economists’ expectations.

Investors have been assessing a steady flow of earnings and economic reports this week. They will get another batch of economic data Friday with the government’s release of October employment data, though a 40-day strike against General Motors is expected to dampen the jobs snapshot.

Benchmark crude oil fell 88 cents to settle at $54.18 a barrel. Brent crude oil, the international standard, dropped 38 cents to close at $60.23 a barrel.

— Compiled from news service reports.

Previous postWest Hollywood Halloween Carnaval 2019 Next postHere's where the jobs are for October 2019 — in one chart

Los Angeles Financial times

Copyright © 2022 Los Angeles Financial times

Updates via RSS
or Email