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Fiat Chrysler to merge with Peugeot; investors ignore lackluster Q3 results

Only a few hours after Fiat Chrysler Automobile (NYSE: FCAU) and French counterpart Peugeot announced a merger, the former reported third-quarter results that missed analysts’ consensus. However, investors were ready to forget the bad numbers as the merger is set to make it the fourth largest automaker in the world.

Post the 50-50 share swap agreement, the combined company will have around $200 billion in turnover. It will have Fiat’s John Elkann taking over as the Chairman and Peugeot’s Carlos Tavares as the CEO. The company will be listed in Paris, New York and Milan.

Volkswagen, Renault-Nissan and Toyota are the other three top automakers in terms of sales. This deal comes just months after Fiat’s failed bid to merge with Renault.

The merger is of significance, as it would give both companies that resources and leverage to operate in a weak automobile industry, and cope with the higher expenses required for new technologies such as electric and autonomous vehicles. The deal would required regulatory approval to complete.

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Q3 miss

For the third quarter, Fiat Chrysler reported adjusted earnings of €0.81 per share (approx. $0.90), compared to the Wall Street consensus of $0.93 per share. Total revenue slid 1% to €27.3 billion (approx. $30.47 billion), as worldwide shipments fell 9%. Analysts expected Q3 revenues of $30.79 billion.

Shipments fell in all three regions – North America, APAC and EMEA.

FCAU shares jumped 4% during pre-market hours as investors shifted focus to the benefits of the merger. The stock is almost flat in the year-to-date period.

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