Fiat Chrysler-PSA merger moves to a shareholder vote

PSA shareholders will be asked to weigh in on two main items:

  • “Review and approval of the contemplated cross-border merger by way of absorption of the Company with and into Fiat Chrysler Automobiles NV.” The phrasing is something of a technicality: All PSA assets, liabilities and legal relationships would be acquired by FCA, which would then immediately be known as Stellantis, and based in Amsterdam, FCA’s current corporate home.  
  • A removal of double voting rights held by certain shareholders. This would be replaced by a “loyalty voting structure” which gives an additional vote for each share in the “loyalty registry” if they are held for three consecutive years in the name of the same shareholder.  

The resolutions will need a two-thirds majority to pass. All the major shareholders — the Peugeot family, Dongfeng and the French state investment fund, Bpifrance — have signaled that they will vote to approve the merger. 
FCA shareholders are also voting on two items:

  • “A proposal to approve the merger and all related proposals in connection with the combination with PSA.” The FCA agenda notes that “PSA will be the disappearing entity and FCA will be the surviving entity,” as part of a cross-border merger. This first item includes the appointment of members of the board of directors of Stellantis and approval of the special dividend to be paid to FCA shareholders.  
  • “A proposal to amend the articles of association to increase and, subsequently, decrease the combined company’s issued share capital” — this is necessary for legal purposes to avoid that the face value of Stellantis shares – which will be set at 0.01 euros, like for FCA — become negative with the distribution of Faurecia shares. 

On the FCA side, a simple majority is required for passage, unless less than half of FCA’s issued and outstanding share capital is not represented at the meeting; in that case a two-thirds majority is needed. The Agnelli family holding company Exor, which owns more than 44 percent of FCA voting rights, has agreed to vote in favor of the merger. 
After the merger, Exor would become Stellantis’s largest single shareholder with a 14.4 percent stake. The Peugeot family, which just closed an agreement to increase its stake in PSA, would follow with a 7.2 percent stake, while Bpifrance and Dongfeng would hold 6.2 percent and 5.6 percent respectively. 

Under the loyalty plan, the combined voting rights of these top investors in Stellantis could top 50 percent after the three-year period, according to Reuters calculations.

But no single shareholder will be allowed to hold more than 30 percent of voting rights based on the loyalty plan, according to the merger agreement. 

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