Report: Fiat Chrysler Rejected PSA Merger Bid

Earlier this year, Fiat Chrysler Automobiles NV turned down an overture from PSA Group to merge, sources tell The Wall Street Journal.

They say the would-be deal, which would have resulted in a $45 billion-a-year business, foundered on fundamentals. For one thing, FCA saw no benefit in a merger that resulted in a greater focus on the already mature European market.

And the Agnelli family, which controls FCA, didn’t like the prospect of the deal being financed largely with PSA stock. A Journal source says PSA would likely need to offer equity to avoid allowing its debt load, still high because of the company’s $2.5 billion purchase of Opel from General Motors in August 2017.

The two companies already collaborate on commercial van production. A merger would give PSA instant access to the U.S. market, where the French company is planning to reintroduce its Peugeot brand in about seven years. But analysts tell the Journal that the payoff for FCA isn’t as clear.

Combining the companies would generate scale, making FCA-PSA nearly equal to Volkswagen Group for sales in Europe. But the merged entity, with global sales of about 8.7 million vehicles, would trail the industry’s largest three sellers: VW and the Renault-Nissan-Mitsubishi alliance (about 10.8 million vehicles each) and Toyota (10.6 million).