Fiat Chrysler’s $3.4 Billion Merger Dividend Is Now Unconditional

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The merger between Fiat Chrysler (NYSE:FCAU) and Peugeot (OTC:PUGOY) has cleared all the necessary corporate steps that the companies needed to complete the deal, which makes the dividend Fiat is paying its shareholders unconditional.

Fiat had said it would pay investors 2.9 billion euros, or about $3.4 billion, before the merger was completed, but it was conditioned on Fiat and Peugeot finishing the deal. They expected that to occur by Jan. 13, which it has, so Fiat announced the dividend will be paid on Friday, Jan. 15.

Line of Fiat 500's charging

Fiat 500s being recharged. Image source: Fiat Chrysler.

The new company that will emerge from the merger will be called Stellantis, which is supposedly derived from the Latin verb stello, meaning “to brighten with stars.” The company’s stock will trade on the NYSE and foreign stock exchanges.

Fiat had originally proposed paying its shareholders 5.5 billion euros, but Peugeot balked at the amount, saying it was too rich considering the depressed state of the industry during the COVID-19 pandemic. 

The Federal Reserve Bank of St. Louis reports that the country’s seasonally adjusted annual sales rate for autos as of the end of November, the latest data available, was just under 2.9 million vehicles for 2020, a 15% decline from the 3.4 million sold in 2019. But that was markedly improved from the 33% decline registered last March at the start of the coronavirus outbreak.

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Fiat and Peugeot believe the merger will put them on a scale with Toyota and Volkswagen as they invest in cleaner vehicles. By streamlining operations to reduce costs and improve profits, management aims to boost shareholder returns.

 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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