Fiat Chrysler Automobiles and Groupe PSA have received shareholder approval for their proposed merger deal.
The merger between Fiat Chrysler and PSA received overwhelming shareholder approval on Monday. The deal, which is expected to be completed on January 16, will form the combined company called Stellantis.
Merger deal
Italian-American automaker Fiat Chrysler and French automaker PSA first confirmed in October 2019 that they were taking part in discussions over a potential merger deal.
Once completed, Â the merger deal would create a $57 billion automobile company.
Prior to the talks with PSA, Fiat Chrysler proposed a merger with another French automaker Renault but it decided to withdraw the offer, claiming that "it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully."
Renault’s largest shareholder is the French government, holding 15% of the company, France also owns 12.2% of PSA and said that it would only approve the merger if there were protections for French jobs and factories.
According to company executives, the merger will result to significant cost savings for the automakers.
The deal also raised concerns of possible closures of manufacturing facilities across the brands, including Vauxhall which employs 3,000 people in the UK. However, PSA promised back in November that it will not shut down sites even though the combined group would  have spare production capacity of almost six million cars.
New automaker Stellantis
The merger will bring together renowned car brands under one company, including Peugeot, Citroen and Vauxhall, Fiat, Jeep and Chrysler. The resulting automaker will be named Stellantis, which means to brighten with stars, and will have a total of14 car brands under it.
Stellantis will become the fourth largest automobile manufacturer in the world, according to Jeff Schuster, an analyst with LMC Automotive.
Stellantis will place some focus on China, the world’s biggest car market where 21 million vehicles are sold annually.
Philippe Houchois, an analyst at Jefferies investment bank, said: "On their own, each group might not be able to afford a reboot in China." However, some experts argued that managing such a large portfolio of brands will be challenging to Stellantis and some of these brands may even eat into each other’s sales.
Schuster said: "And I think there's an [electric vehicle] expertise PSA has that FCA doesn't, so there's some nice synergy there."
Meanwhile, Michelle Krebs, an analyst with Cox Automotive, pointed out: "The creation of Stellantis is simply a large-scale example of an underlying trend we're seeing in the automobile business right now, as all serious automakers face the monumental task of reshaping their operations with an eye toward 2030, when EVs and autonomous technology will have shifted from emerging to mainstream."
Shares of the company will start trading on stock markets in France and Italy on January 18 while it will begin trading on the New York Stock Exchange the day after.
While the merger deal has been approved by their shareholders, the companies mentioned that it will still need some final regulatory approvals, including those of the European Union and European Central Bank.
