UPDATE 1-After a long journey, Fiat Chrysler and PSA seal the merger to become Stellantis

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MILAN, Jan 16 (Reuters) – Fiat Chrysler and PSA sealed their long-awaited merger on Saturday to create Stellantis, the world’s fourth-largest car group with enough pockets to finance the shift to electric driving and take on bigger rivals like Toyota and Volkswagen. .

It took Italian and French automakers more than a year to finalize the $ 52 billion deal, during which the global economy was disrupted by the COVID-19 pandemic. They first announced plans to merge in October 2019, to create a group with annual sales of around 8.1 million vehicles.

“The merger between Peugeot SA and Fiat Chrysler Automobiles NV that will lead the way towards the creation of Stellantis NV became effective today,” the two automakers said in a statement.

Stellantis shares, which will be headed by current PSA CEO Carlos Tavares, will begin trading in Milan and Paris on Monday, and in New York on Tuesday.

Now, analysts and investors are focusing on how Tavares plans to address the enormous challenges facing the group, from excess production capacity to a dismal performance in China.

Tavares will hold his first press conference as CEO of Stellantis on Tuesday, after ringing the NYSE bell with President John Elkann.

FCA and PSA have said that Stellantis can reduce annual costs by more than 5 billion euros ($ 6.1 billion) without plant closures, and investors will be eager for more details on how it will do so.

Marco Santino, a partner at consultancy Oliver Wyman, said he expected Tavares to reveal the broad lines of his action plan soon, but without revealing too many details at first.

“He has proven to be the type of person who prefers action to words, so I don’t think he makes loud statements or tries to sell too much to targets,” he said.

Like all global automakers, Stellantis needs to invest billions in the coming years to transform its range of vehicles for the electric age.

But other pressing tasks lie ahead, including reviving the group’s lagging fortunes in China, streamlining its huge global empire, and tackling massive overcapacity.

“It will be a step-by-step process, also to allow the market to better appreciate each move. I don’t think we will have all the details before a year, ”Santino said.

FCA CEO Mike Manley, who will lead Stellantis’ key North American operations, has said that 40% of the automaker’s expected synergies would come from convergence of platforms and engines and from optimizing investments in R&D, 35% of savings on purchases and another 7% savings on sales operations and general expenses.

$ 1 = 0.8226 euros Edition by Mark Potter, Kirsten Donovan

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