Peugeot given green light on merger with Fiat

French automotive giant Peugeot has been given the go-ahead to complete its merger with Italian-American company Fiat as the group moves to become the fourth-largest automaker on the global market.

The merger was confirmed by shareholders of Peugeot owner PSA on Monday morning following a near-unanimous vote in favour from those with double voting rights.

The result was revealed at a virtual meeting of company shareholders and is part of a plan to cut costs in an industry that is still reeling from the effects of the coronavirus pandemic.

The terms of the €50 billion deal were re-examined back in September as the two companies attempted to shave further costs from the transaction.

Read more: Fiat Chrysler & PSA reexamine terms of €50bn merger

The merger, named Stellantis, is set to oversee an output of 8.7 million cars per year, falling behind Volkswagen, Toyota, and Renault-Nissan to create €5 billion in synergies.

PSA Chief Executive Carlos Tavares told the online meeting they were "ready for the merger."

"We will announce the final date for this closure shortly following the announcement provided all shareholders approvals are granted," he added.

The decision will see Peugeot and Citroen join with Maserati and Alfa Romero, all companies that have shaped the French, Italian and US automotive industries.

PSA will retain its role as Peugeot's parent company and Tavares will be seated as CEO of Stellantis. Fiat Chrysler chairman John Elkann will take his place next to Tavares as its chairman.

Tavares is expected to take control of the company relatively soon, with some analysts predicting it could happen later this month. According to earlier information provided by Stellantis, the plans should be implemented by March at the latest.

A deal of this magnitude was long desired by former Fiat Crysler CEO Sergio Marchionne, who had predicted the necessity of consolidation within the industry, but he was unable to cement this dream before his death in 2018.

The two companies have numerous overlaps in their production and engineering operations across Europe and will put any of the 15 brands Stellantis will house in their crosshairs.

Talks of the merger began back in October 2019, with the two major shareholders finally deciding on their plans to marge two months later in December.

Read more: Fiat Chrysler in merger talks with Peugeot owner PSA

Fiat had suspended operation at most of its European plants back in March in order to protect its workers from the effects of the coronavirus pandemic and to meet a global slump in demand.

Following its implementation, Stellantis will have to deal with a number of issues outside of general pandemic cost-cutting: both Peugeot and Fiat have poor manufacturing infrastructure in China and are lagging behind competitors regarding electric vehicles.

Many of these challenges may offset some of the money saved through the meticulous micromanagement from the deal.

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