PSA Group and Fiat Chrysler Automobiles have agreed to combine to create the world’s fourth-biggest carmaker, as the manufacturers prepare to shoulder the costly investments in new technologies transforming the industry.
In the biggest auto tie-up since Daimler’s ill-fated purchase of Chrysler in 1998, the French and Italo-American carmakers will each own half of the enlarged business.
The new company, with global sales of 8.7 million vehicles, will be run by PSA Chief Executive Officer Carlos Tavares, with Fiat Chairman John Elkann holding the same role.
The transaction would forge a regional powerhouse to rival Germany’s Volkswagen and, with a market value of about US$47 billion, surpassing Ford. It will take as long as 15 months to complete, pending approvals by shareholders of both companies and by regulators, the carmakers estimated.
Like executives across the industry, Tavares and Elkann are responding to growing pressure to pool resources for product development, manufacturing and purchasing in the face of trade wars and an expensive shift toward electric and self-driving technology.
[Indeed, industry sources said that in the future, the new company plans to move “more than two-thirds” of production to “just two platforms, with 3 million cars per year on a compact/midsize platform and 2.6 million on a small platform,” reports Automotive News. “The smaller platform will be PSA’s CMP architecture and larger cars will be on the group’s EMP2 (while) Ram pickups and larger Jeep models will continue to use FCA underpinnings.” —Ed.]
“The challenges of our industry are really, really significant,” Tavares, 61, told reporters on a call Wednesday. “The green deal, autonomous vehicles, connectivity and all those topics need significant resources, strengths, skills and expertise.”
In an era when size is becoming ever more important, the deal will turn the two mid-sized carmakers into a global heavyweight, with a stable of popular brands and annual vehicle sales surpassing General Motors. The combination will give Peugeot-maker PSA a long-sought presence in North America and should help Fiat gain ground in developing low-emission technology, where it’s lagged rivals.
Yet the new company will still be heavily reliant on Europe’s sluggish and saturated auto market, and poorly positioned in China, the world’s largest country for car sales.
The companies are aiming to extract 3.7 billion euros in annual synergies from the deal, without closing any plants, unchanged from the target they announced when they disclosed their merger discussions.
China’s Dongfeng Motor Corp., which owns 12 per cent of PSA, will see its stake in the combined company decline to 4.5 per cent as a result of the deal and the sale of a portion of its holding to the French carmaker.
Dongfeng’s stake in PSA has attracted attention because of the possibility it could interfere with U.S. regulatory approval. U.S. economic adviser Larry Kudlow said last month the Trump administration would review the proposed merger because the deal would give the Chinese carmaker a stake in the combined company.
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Rania Llewellyn is out after nearly three years as chief executive of Laurentian Bank of Canada, her sudden departure coming less than a month after a strategic review failed to find a buyer for the chronically underperforming Montreal-based bank.
Shortly after the strategic review ended, the bank’s operations were shaken by a major IT outage that has not been fully resolved.
Llewellyn, who was recruited to Laurentian from Bank of Nova Scotia in 2020 with much fanfare, becoming the first woman to lead a major Canadian bank, has been succeeded as CEO by Éric Provost, an 11-year veteran of Laurentian who was most recently group head of personal and commercial banking. He has also joined the board of directors.
In a further shakeup, Michael Boychuk, former audit committee chair and reportedly a key player in the strategic review, has been appointed chair of the board following the resignation of director and chair Michael Mueller, who had been on the board since 2013.
“Éric is the right executive to lead the bank at this critical point in its evolution,” Boychuk said in an Oct. 2 statement, adding that Provost’s ascension was part of the bank’s formal succession planning process.
“We have experienced challenges recently and the board is confident that Éric will successfully focus the organization on our customer experience and operational effectiveness.”
Meny Grauman, a bank analyst at Scotia Capital Inc., said Llewellyn’s sudden departure Oct. 2 was a negative development for the bank.
Sources said Llewellyn was not pleased with the timing of the strategic review, which was acknowledged by the bank in July, just 18 months into her plan to transform the underperforming lender with a promise of “accelerated” growth by 2024.
One industry source familiar with the review said Llewellyn felt the initial rollout of her vision had been successful and she had not had sufficient time to make necessary changes to the bank’s culture and operations.
Llewellyn could not immediately be reached for comment.
Shares in Laurentian, which had already settled back down to around $30, where they traded before the strategic process was announced, fell further following the tech problems and word of Llewellyn’s departure. The stock was trading at $28.81 at midday on Oct. 2.
Laurentian has underperformed other Canadian banks, including those in Quebec, for years. Even before the shares tumbled in September when it was revealed that the strategic review had ended without a buyer, Laurentian’s stock had risen around 165 per cent since January of 1995 compared to an 1,800 per cent rise for shares of Royal Bank of Canada shares and a more than 2,000 per cent rise for National Bank of Canada stock. National Bank’s market capitalization of $34.4 billion in July dwarfed Laurentian’s of just $1.72 billion, which had sunk further to $1.25 billion by Oct. 2.
While there is much to do, Grauman said the immediate priority for Laurentian’s new CEO will be to address the impacts of a mainframe outage that occurred last week during regular maintenance.
A three-part action plan announced by the bank will include resolving any outstanding issues from the outage, better communicating progress with the bank’s clients, and launching a comprehensive review of the factors that led to the outage.
Laurentian has already announced that all service fees charged to clients for the month of September will be reversed, and that normal hours will be extended this week.
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TTC riders in Toronto’s downtown core now have access to 5G service.
In a Monday media release, representatives for Rogers said customers of all major Canadian wireless companies can connect to 5G to talk, text, and stream on Toronto’s subway system.
Service extends to all stations and tunnels in the downtown U (between Bloor-Yonge and Spadina, as well as Dupont Station), as well as in 13 stations between Keele and Castle Frank, plus the tunnels between St. George and Yonge stations.
The announcement comes a day earlier than anticipated, as the federal deadline given to Rogers to implement the extended service for all mobile customers was originally slated for Tuesday.
Rogers customers have had 5G connection in the aforementioned stations and tunnels since August, a decision that sparked ire in the telecommunications space, particularly from rivals Telus and Bell.
“Our dedicated team of technologists designed and introduced an immediate solution that added capacity, so Bell and Telus could join the network,” Ron McKenzie, chief technology and information officer for Rogers, said.
“For over 10 years, subway riders have been without mobile phone services and the Rogers team is pleased to step up and make 5G a reality for all riders today.”
In a statement shared with CP24, representatives for Telus said, “we are pleased to launch service for all our customers in connected TTC subway tunnels and stations. Now, TELUS customers can browse the Internet, talk and text, staying connected and safe on Toronto transit. We’ll be working hard to expand the number of stations and tunnels covered in the coming months.”
“We would like to thank Minister Champagne for his leadership in ensuring that all wireless carriers have the ability to serve their customers in Toronto’s subway system, and that Rogers can no longer delay the deployment of wireless service for all TTC riders regardless of their choice of carrier,” representatives for Bell shared in an afternoon statement.
“Bell looks forward to working collaboratively with our partners to build out the remainder of the TTC’s wireless network.”
Toronto Mayor Olivia Chow responded to today’s news in a tweet.
“Happy to hear that all 3 major telecoms have unrolled service to downtown stations,” she wrote.
“The work continues to expand service to the rest of the TTC subway system. François-Philippe Champagne and I will work to make sure it happens quickly.”
CP24 and CTV News Toronto are owned by Bell Media.
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