November 21, 2019 | Industrials | Europe | Ended

Fiat Chrysler Automobiles / Peugeot: Pre-Deal Hurdles, Rationale and Deal Structure

In what may shortly become the largest public European merger of 2019, by far, the union of Fiat Chrysler Automobiles (“FCA”) and Peugeot (“PSA”) will create the third largest automaker in the world. With the car industry under pressure due to subdued demand and a shift to electric and self-driving cars, joining forces makes sense as the best path to survival. The companies’ advisors and management teams are working to get a definitive deal announced in the coming weeks and will be hoping that their efforts will not be hampered by a recent litigation roadblock erected by General Motors (GM US). Pre-deal hurdles to arriving at a firm deal in the automotive space are vast and most recently caused FCA to withdraw from its negotiations with Renault (RNO FP). For FCA / PSA, expectations are no different and, in this report, we analyse anticipated pre-event risks: unions, politicians, litigation, major shareholders, antitrust and valuation.

Contents 1. Rationale and Likelihood of a Firm Deal 2. Offer Consideration, Structure and Control Sharing 3. Influence of Major Shareholders 4. Securing Union Approval to Advance the Merger; GM Litigation Effects 5. Expected Antitrust Scrutiny 6. Break Price Analysis 7. Expected Outcomes, Timing and Risk Arbitrage Trading Views (41 pages)

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