Analyst Note| Richard Hilgert |
No-moat rated Fiat Chrysler and PSA Peugeot Citroen announced Jan. 4 that the shareholders of each company voted in special meetings to approve their merger into Stellantis. The companies expect the merger to close on Saturday, Jan. 16, with Stellantis shares trading in Europe on Monday, Jan. 18 and on the New York Stock Exchange on Tuesday, Jan. 19. In our view, the market has discounted the shares of both companies on concerns over high spending for vehicle electrification, management’s ability to deliver on its cost savings target, and Fiat Chrysler debt, which has increased to EUR 26.4 billion at the end of the third quarter 2020 from EUR 12.9 billion at year-end 2019 due to COVID-19. We think the market has valued Stellantis as though fundamentals will only deteriorate from historic levels.