As Fiat and Peugeot’s mega-merger is nearing approval, several workers could lose their jobs, Associated Press reported.
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Fiat (FCAU) and Peugeot entered into an all-share merger deal worth $50 billion in 2019 to form a new company called Stellantis which will be headed by Carlos Tavares, current CEO of Peugeot. Shareholders of both companies are set to vote on the merger deal today. The transaction got European Union approval last month.
Per the Associated Press report, Tavares is known for cutting costs and has little tolerance for underperforming ventures. This signals that the Chrysler brand could get the axe as could other low-selling vehicles, which is likely to result in job losses across its multiple facilities. (See FCAU stock analysis on TipRanks)
The companies are planning to drastically reduce engineering and manufacturing costs by consolidating vehicle platforms, implying job losses in Italy, Germany and Michigan, the report further added.
On Nov. 2, AlphaValue analyst Jorge Velandia upgraded Fiat to Buy from Sell and raised the price target to EUR12.50 ($15.17 which depicts 16.2% downside potential) from EUR9.62. In a note to investors, Velandia said that the company’s margins and cash flow could continue to grow on the back of strong demand for sports utility vehicles.
Overall, the Street consensus of a Moderate Buy is based on 5 Buys and 2 Holds. The average analyst price target of $17.10 suggests downside potential of about 5.5% to current levels. Shares have gained 23.2% in 2020.
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