1st ICAI 2020

International Conference on Automotive Industry 2020

Mladá Boleslav, Czech Republic

Mergers and Acquisitions in the Automotive Industry: Combination of FCA–PSA Aleš Borkovec ŠKODA AUTO University Department of Law and Economics Na Karmeli 1457, Mladá Boleslav, 293 01 Czech Republic e-mail: ales.borkovec@savs.cz

Abstract This paper analyses the mergers and acquisitions in the automotive industry and is focused on the merger between Fiat Chrysler Automobiles N.V. (FCA) and Peugeot S.A. (PSA), which was announced at the end of 2019. The benefits of the combination (FCA–PSAmerger), as well the specific synergies, are described. The legal and economic aspects of the FCA–PSA merger are examined, and the corporate governance of the combined corporation explained. New challenges, opportunities and threats are not omitted from the view of the whole automotive industry; nevertheless, special attention is paid to the pending merger of FCA and PSA. Keywords: acquisition, combination , corporation, governance, merger JEL Classification: D22, D24, G34, K22 1.1 New Planned Combination On 18 th December 2019 a proposed merger between Fiat Chrysler Automobiles N.V. (FCA) and Peugeot S.A. (PSA) was announced. The combined company, now still without a name, but simply so-called “DutchCo”, will be a corporation governed and constructed in accordance with the laws of the Netherlands. The main benefits of the combined company, as described in the combining companies’ press release and presentation, are (among others): (a) benefits of scale, (b) strong position of the combined company in different markets, (c) broad and complementary brand portfolio and (d) strong balance sheet. And as the novel coronavirus pandemic is in progress, the proposed combination will have to deal with another big challenge. 1.2 Current State of Automotive Industry The automotive industry is no stranger to the effects of globalisation (Borkovec, 2013, p. 222-223). The main reason is the same as in the other sectors – synergy effects. In the automotive industry, this means unifying car platforms. Yet there are some significant differences between the car industry and others, such as the emphasis on brands, since cars are so-called “position goods”, maybe more than any other good. 1. Introduction

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