As People rejoice a coronavirus-muted Thanksgiving vacation, here is a bit of sunshine studying courtesy of the forthcoming PSA-FCA merger generally known as Stellantis. By gentle, we really imply about as gentle as your grandmother’s insanely wealthy mashed potatoes, adopted by two helpings of stuffing and three slices of apple pie. Really no, that is nonetheless not sufficient.
As you may think, the merging of two massive automotive conglomerates is not straightforward, however we give huge credit score to the staff at Automotive Information Europe for locating a needle on this literary haystack. The PSA-FCA merger is not actually a merger however an acquisition, and PSA is the dominant companion. That’s, from an accounting standpoint anyway.
What we’ve got here’s a 714-page doc that is full of phrases like income, shares, redundancy, and phrases similar to profit-and-loss, pursuant to, and everybody’s favourite dialog starter, capital expenditure. It is a prospectus, which is a flowery time period for a proper monetary doc introduced by an organization that outlines monetary safety. On this occasion, the doc is filled with technical communicate but additionally divided into a number of sections which are simpler for buyers to digest.
A type of sections is the abstract, and on the prime of web page 23 beneath Accounting Remedy you will discover the next passage:
The merger might be accounted for utilizing the acquisition technique of accounting in accordance with IFRS 3, Enterprise Mixtures (“IFRS 3”), which requires the identification of the acquirer and the acquiree for accounting functions. Based mostly on the evaluation of the symptoms beneath IFRS 3 and consideration of all pertinent information and circumstances, FCA and PSA’s administration decided that PSA is the acquirer for accounting functions and as such, the merger is accounted for as a reverse acquisition.
That is actually plain English, and it is additional supported by the prospectus explaining that six of the 11 members comprising the Stellantis board might be related to PSA. That places FCA within the minority, and the primary Stellantis CEO might be present PSA Group CEO Carlos Tavares.
What does this imply for FCA going ahead? It is onerous to say, however we already reported on rumors that some FCA and/or PSA manufacturers could possibly be eradicated on account of the merger. Chrysler has lengthy been teetering on the chopping block, to not point out Lancia. As for the endeavor being a merger of equals, from the monetary aspect not less than it appears some corporations are extra equal than others.
If you happen to’re eager to dive into the total 714-page prospectus, you may load it on the supply hyperlink under.
