Phitrust has written to the Chairman of Groupe PSA concerning the proposed merger with Fiat Chrysler Automobiles (FCA Group), questioning the financial, as well as environmental, social and governance (ESG) aspects of the project, therefore questioning its implementation in the current state.
These questions are grouped around 3 major issues:
1. The parity initially proposed does not reflect the reality of the strengths and weaknesses of both groups. It was made on the basis of a 50/50 merger, erroneous by principle as a merger between equals does not exist. The parity of this merger is also unsatisfactory in its calculation, taking into account the relative value of the two groups with the intended asset disposals and distributions, as well as their situation in industrial (and social …) terms. Phitrust questions the level of readiness of both companies in order to face the challenges of the future European, as well as international environmental regulatory standards, and challenges in the automotive sector as a whole.
Phitrust requests that, in order to respect the balance between the parties, the merger parity or announced distributions be reviewed.
2. The proposed transfer of registered office in the Netherlands would in fact introduce a deterioration of shareholders’ rights and a decline in governance. This deterioration concerns, in particular, the end of the representation of employees on the Board of Directors, the maintenance of unequal voting rights, as well as other restrictions on minority shareholder’s rights (higher threshold for filing resolutions, stronger capital protections) in Dutch law.
Phitrust therefore requests that the head office of the future entity be located in France and subject to French law.
3. In case of refusal of the transaction by Groupe PSA shareholders in Extraordinary General Meeting (EGM), Phitrust expressly requests that the possible compensation for breach of contract, be simply canceled.
Since the announcement of this merger, Phitrust is surprised by the bad news leaked on the market. These news concern a lawsuit against FCA for corruption (which would be orchestrated by General Motors on the US market) and the risk of fines. In addition, tax penalties concerning the acquisition of Chrysler could affect FCA in Italy due to the significant amount of the fine.
All this reflects the image of a poorly prepared operation, carried out in a hurry (following the setback suffered by that envisaged with Renault), and which at this stage leaves far too many unresolved issues in order for this merger to be accepted in the state by Groupe PSA shareholders during the Extraordinary General Meeting dedicated to this project.
Phitrust hopes that the Groupe PSA executives will have heard these questions and will provide answers before presenting this major transaction to the shareholders’ vote at the General Meeting.
About SICAV Phitrust Active Investors France: Since 2003, the SICAV (French Mutual Fund) Phitrust Active Investors has been working with major listed companies to develop their environmental, social and governance (ESG) practices.
Phitrust – Denis Branche / Olivier de Guerre – Tel. : +33 (0)1 55 35 07 54 / 58