MILAN, Dec 17 (Reuters) – The board of directors of Italian-American automaker Fiat Chrysler Automobiles has approved a memorandum of understanding for a merger with French rival PSA Peugeot, a source familiar with the matter said. The board of directors of PSA, which is owned by Peugeot, had previously approved a binding deal paving the way for a $50 billion commitment to create the world`s number four automaker. ** Prior to the closing of the transaction, FCA would pay its shareholders a special dividend worth €2.9 billion. This dividend was reduced by €5.5 billion originally to get cash due to the coronavirus pandemic. For its part, PSA announced the postponement of the planned spin-off of its 46% stake in parts manufacturer Faurecia EPED. PA until the completion of the merger and the extension to all shareholders of the new group. It was also agreed that the boards of directors of the two conglomerates would consider a possible distribution of $500 million (UA$811 million) to each company`s shareholders before the merger agreement is concluded. Alternatively, a distribution of one billion euros (UA$1.6 billion) will be paid to all Stellantis shareholders. Fiat Chrysler Automobiles NV and Peugeot`s rival automaker PSA Group have agreed on binding merger terms containing sweeteners to make the transatlantic link more attractive to U.S. regulators and PSA shareholders.
The merger would unite brands such as Fiat, Jeep, Dodge, Ram Alfa Romeo and Maserati with Peugeot, Citroën, Opel and DS. The Wall Street Journal reported on Tuesday that Peugeots UG, a board of directors of -0.44%, supported a binding merger agreement with Fiat Chrysler FCA, -0.42% FCAU, -0.61%. The two companies announced on Wednesday that long-term shareholders EXOR NV EXO, +0.27%, Bpifrance, the Peugeot family and China Dongfeng 489, -0.38%, have all committed to vote in favor of the agreement at the respective extraordinary general meetings of the companies. With the deal, which is expected to close in the first quarter of 2021, it will eventually establish the 4th largest global automaker by volume in the world. The high-level merger was announced at the end of 2019 and will bring together 14 different brands. These are Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, DS, Fiat, Jeep, Lancia, Maserati, Opel, Peugeot, Ram and Vauxhall. ** The two automakers intend to complete their merger in the first quarter of 2021. Fiat Chrysler and Peugeot agreed on the link at the end of October. Under the agreement, the shareholders of each company will own 50% of the new entity. . .