Fiat Chrysler Automobiles NV and Peugeot maker PSA Group canceled dividend payments they promised their shareholders that were part of a broader agreement to merge, but said the deal remains on track.
Both companies had previously warned their annual dividends for 2019 were under review amid an industrywide scramble to raise and save cash to weather the coronavirus pandemic. The planned dividend, amounting to €1.1 billion (US$1.2 billion) for each company, was an important component in the merger deal.
In a release issued late Wednesday night, May 13, Fiat and Peugeot said they remained on track to complete the planned multibillion-dollar tie-up before the end of March 2021. Merger preparations “are advancing well, including with respect to antitrust and other regulatory filings,” the car makers said in a joint statement.
Still, the dividend cancellation highlights the pressure both companies are under to push the complex deal through amid tumult in the global car industry and the world’s stock markets. The pact, agreed to late last year, was structured mostly as a stock swap. But it also included two sets of cash payouts designed, in part, to equalize valuations between the two companies and achieve a so-called merger of equals.
Full Content: Wall Street Journal
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