Sunday 15 December 2019 4:21 pm

Fiat Chrysler-Peugeot merger: French shareholders look for board control

French shareholders are looking for confirmation that they will keep a numerical advantage on the combined board of PSA and Fiat Chrysler if CEO Carlos Tavares leaves after the two companies merge.

The two firms are putting the finishing touches to a $50bn merger plan announced in October, that would create the fourth largest car maker in the world.

Read more: Fiat Chrysler and Peugeot owner PSA have agreed a merger which could reshape the car industry

The draft agreement gives both firms five seats on the board of the merged entity, while an eleventh would go to current PSA chief executive Carlos Tavares, who is expected to take on the same job in the new company.

French shareholders see the arrangement as giving them the de-facto role of senior partners.

They are looking for assurances that this advantage will remain even if Tavares heads for pastures new, sources told Reuters.

There is no suggestion that the matter is an obstacle to the deal.

A source close to FCA said the draft agreement over the new company’s governance structure is not being questioned.

PSA makes Peugeot and Citroen cars. It has called a meeting of its board for Tuesday, where directors are expected to discuss the deal.

Read more: What is behind Fiat Chrysler’s proposed mega-merger with Peugeot?

Both firms are confident they will reach a deal by the end of the year, but shareholders on the French side are reportedly looking to clarify before signing on the dotted line.

Shareholder advisory company Proxinvest said in a note that the French group’s shareholders were paying “an implicit control premium … while there was no real control of PSA on FCA”.

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