Fiat Chrysler and Peugeot boards accept the auto merger

The board of directors of the French and Italian car manufacturers Fiat Chrysler and Peugeot have accepted the auto merger as equals. This statement from the companies confirms the earlier media writing this week. The shareholders of each company would own 50% of the equity of the newly combined group.

According to the companies, this new combination will create the 4th largest global auto company with 8,7 million vehicles annually. The strength areas would be the FC´s in the North America and Latin America and Peugeot PSA´s strength in Europe. The brand areas would include luxury, premium, mainstream, passenger car, SUVs and Trucks.

-The merged entity would bring together the companies’ extensive and growing capabilities in the technologies shaping the new era of sustainable mobility, including electrified powertrain, autonomous driving and digital connectivity, the companies say in the press release.

The Fiat Chrysler and Peugeot estimate that the annual run-rate synergies would be 3,7 billion euros without any plant closures resulting from the transaction. According to the release, it is argued that 80% of the synergies would be achieved after 4 years.

-The total one-timecost of achieving the synergies is estimated at €2.8 billion, Fiat Chrysler and Peugeot say.

The new company would have Dutch parent company, with Dutch governing rules, and the Board would include a majority of independent Directors. John Elkann would be the Chairman of the Board and Carlos Tavares would be as CEO, but also a member of the board.

It is expected that the companies form the Memorandum of Understanding in the coming weeks.

– Both share the conviction that there is compelling logic for a bold and decisive move that would create an industry leader with the scale, capabilities and resources to capture successfully the opportunities and manage effectively the challenges of the new era in mobility, the companies underline the benefits of the merger.

The new car company would have annual revenues, combined of nearly 170 billion euros and operating profit over 11 billion euros.

 

 

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Stocks down in NY due to new trade tariffs

The US stock markets closed down today due to the US China trade dispute. Mr President Donald Trump said in the CNBC interview that he is preparing to have new tariffs for 300 billion dollars for goods if the Chinese President Xi Jinping is not meeting in the G20 meeting in Osaka, Japan in late June. This would mean that Chinese goods would get new tariffs to the current 250 billion dollars of goods.

Dow Jones index closed down 0,05 % to 26048,51 points, the S&P 500 index closed down 0,03 % to 2885,72 points and Nasdaq ended down 0,01% to 7822,56 points.

In the forex markets, the euro was trading up 0,02 % to 1,13 dollars, while the sterling was down 0,05 % 1,2719 dollars. President Donald Trump´s comments about the interest rates and the Fed´s too tight monetary policy was noticed in the markets during the day. According to Trump, the euro is undervalued about 20 %.

In the tech-side some of the largest US states are trying to stop the megadeal between T-Mobile and Sprint. They warn that the mobile carrier merger would lead to higher consumer prices.

In London the FTSE 100 -index closed up 0,31 % to 7398 points and in Germany the Dax-index was also up, +0,92 % to 12155,81 points. In France, the CAC 40 index closed up 0,48 % to 5408,45 points.

In the Brexit situation, the EU is saying that there will be no new agreement between the parties. According to Sunday Times, the PM candidate Boris Johnson has said that UK should not pay 39 billion pounds settlement if they there is no new deal.

The new UK Prime Minister and the new Conservative Party leaders is announced on July 22. There are 10 candidates for this position. Between 19th-20th July MPs take part in ballots until only 2 candidates remain.

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Auto stocks gained by the Fiat-Renault news (updated)

The auto stocks gained on Monday trading in Europe after the confirmation of the Italian-French car manufacturing merger proposal. Fiat Chrysler (FCA) and Renault (RNO) said that they are planning a 35 billion euros merger, which would make the new company the world’s third largest auto manufacturer. The planning of the merger was published on Saturday evening.

Fiat´s stock price jumped by 7,98 % to 12,37 euros and Renault´s 12,09 % to 56,03 euros. The Stoxx Europe 600 Automobiles & Parts index ended up 1,43 % to 473 points.

The idea of the auto merger is to get synergies, estimated of 5 billion euros, in the R&D related to electric cars and lower emissions, and in the purhasing power. The new company, owned by 50-50 % by a Dutch holding company, would have production of 8,7 million cars annually. Brands like Jeep, Maserati and Alfa Romeo would be part of the merger.

The Japan alliance partner Nissan Motor & Mitsubishi might join the new group later on. In order to proceed the Italian and French Governments will comment the merger in details during the next week.

Otherwise the German DAX-index gained 0,5 % to 12071 points and the French CAC 40 0,37 % to 5336 points. The shares of Volkswagen, the world´s largest car manufacturer, (VOW) ended up 0,55 % to 145,25 euros in Frankfurt.

In London the trading was closed due to the Spring Bank Holiday.

In the US, the stocks markets were closed while having Memorial Day holiday.

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FCC is backing T-Mobile and Sprint merger

The US Federal Communications Commission Chairman Ajit Pai said he would back the merger between the telecommunications operators T-Mobile and Sprint in the US markets. The 26 billion dollars deal might be proceeding after the companies had made some adjustments to the operations.

According to Wall Street Journal this assurance would help the merger although the antitrust issue is still on the agenda. The merger needs the approval from both US Federal agencies and some market specialists expect that the FCC decision will boost also the Justice Department’s antitrust division to accept the merger.

-Two of the FCC´s top priorities are closing the digital divide in rural America and advancing United States leadership in 5G, the FCC Chairman Mr. Paid said according to WSJ.

In 2017 the FCC report found that the wireless business has had effective competition as prices for mobile data has been falling.

Today T-Mobile and Sprint said that they have agreed to invest in new wireless broadband service, especially in rural areas and to build new 5G infrastructure. The companies also agreed to sell Sprint´s Boost brand, a prepaid mobile phone service with millions of customers.

Shares of Sprint (S) jumped 22,8 % to 7,59 dollars in New York and T-Mobile´s (TMUS) shares were also trading higher, up 4,80 % to 78,99 dollars. The whole sector was also up: Verizon(VZ) up 1,82 % to 59,51 dollars and AT&T (T) up 1,89 % to 32,40 dollars.

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