Peugeot deal to boost Exor’s coffers to $4 billion in 2022

Fiat Chrysler’s top shareholder Exor will have a total of 3.6 billion euros ($4 billion) in 2022 to invest once a deal to merge the carmaker with rival Peugeot goes through, Exor’s chief John Elkann said.

Chairman and CEO of Exor and Chairman of Fiat Chrysler Automobiles (FCA) John Elkann and Exor Managing Director and Chairperson CNH Industrial Suzanne Heywood attended an investor day held by the holding group of Italy’s Agnelli family in Turin, Italy, on Thursday.

Elkann, who leads the Agnelli family’s investment vehicle, said he was confident Fiat Chrysler (FCA) and Peugeot owner PSA would sign a binding agreement by the end of the year and dismissed concerns a lawsuit filed against FCA by General Motors (GM) could derail the deal.

In presenting Exor’s new strategy to investors 10 years after the holding company was established, Elkann said Exor would have about 2 billion euros of cash in 2022 for acquisitions, before taking into account an expected special dividend of around 1.6 billion euros from the FCA-PSA deal.

In addition to being chairman and chief executive of Exor, Elkann is chairman at FCA, in which Exor holds a 29% stake.

Besides FCA, Exor’s assets include controlling stakes in luxury carmaker Ferrari, industrial vehicle manufacturer CNH Industrial, re-insurer Partner Re and Italian Serie A soccer team Juventus. It also has a 43% stake in publishing group The Economist.

Elkann said Exor would not pay out special dividends to its investors following the FCA-PSA merger. He also ruled out in the short term a new share buyback, which is the traditional tool for the group to award its shareholders extraordinary remuneration.

“We have just completed an own-share repurchase program and we don’t plan to launch a new one, so all the extraordinary dividend we would get from a PSA deal will be used for acquisitions,” he said.

Elkann added Exor had not yet decided in which industries it might expand its business.

“But I see ourselves buying new companies in the future,” he said, adding Exor would keep a strong focus on investments in the ‘environmental, social and governance’ (ESG) category.

Elkann said the family intended to remain a stable shareholder in the auto sector.  The chairman of Fiat Chrysler Automobiles indicated that the merger with French carmaker PSA Peugeot would not be affected by a General Motors lawsuit.

John Elkann told reporters in Turin that the Italian American company would fight the lawsuit in court, adding “we are not worried.”

GM has accused Fiat Chrysler in a lawsuit filed at a US district court on Wednesday of bribing union officials to get favorable contract terms from the United Auto Workers Union.

Elkann, speaking ahead of an investor-day event for the Exor investment arm that controls FCA, was quoted by Italian news agency ANSA as saying there would be a memorandum of understanding with PSA by the end of the year, as previously announced. FCA said the lawsuit is “meritless.”

In the lawsuit, GM accused Sergio Marchionne, the long-time Fiat Chrysler CEO who died last year, of authorising bribes worth more than $1.5 million to union officials in a scheme to impose unexpected labour costs on GM.

“I am sorry that one is making false accusations against a person like Marchionne who cannot defend himself,” ANSA quoted Elkann as saying.

Marchionne’s successor as Fiat Chrysler CEO, Mike Manley, said in a letter to employees that the lawsuit “rehashes a collage of salacious public allegations” from a pending case involving a training centre, and “at first review, beyond unsupportable speculation, does not include any new factual allegations.”

Manley said the company “would not be slowed down by this act,” adding “let’s keep the performance up, as it has clearly got some of our competitors worried.”

Since 2017, eight people have pleaded guilty in an investigation of union officials and Fiat Chrysler executives enriching themselves with money from a job training center in Detroit. The probe appeared to widen this summer when a former UAW official was charged with accepting kickbacks from union vendors.

Meanwhile, French media group Vivendi is prepared to sell part of its stake in Mediaset at a loss in an attempt to reach a deal to end years of bitter legal disputes with the Italian broadcaster, two sources close to the matter said.

One of the sources said that in order “to show its goodwill” Vivendi was prepared to sell the Mediaset shares held by its Simon Fiduciaria trustee at a price of 3.25 euros each.

Agencies