Fiat Chrysler and PSA Group will no longer be retaining their respective names once they merge their companies. Instead, both companies have agreed to rename the combined entity to Stellantis. According to the companies, the agreed-upon new name was taken from the Latin root word "Stello," which means to "brighten with stars."
The 50-50 all-stock merger, which was first announced late last year, will make Stellantis the world's fourth-largest automaker in terms of scale and revenue. In a statement, both companies claim that Stellantis will become one of the global leaders in the next era of the automotive industry. Despite their decision to go with a brand new company, Fiat Chrysler and PSA assured stakeholders that the values of both automakers will be preserved.
Fiat Chrysler stated that all of the brand names under the company will still remain, including its Dodge, Alfa Romeo, and Maserati badges. Brands under PSA, which owns Citroen and Peugeot, will also continue as well.
Automotive analysts noted that the decision to rename the company underscores both Fiat Chrysler and PSA's intention to start with a clean slate. However, the stakes are currently very high in the industry given the economic situation, and trying to reinvent a brand will be much more difficult to achieve.
In most mergers and acquisitions, the combined company will typically take the name of the stronger brand, even if it was not the one that initiated the deal. This holds true for mergers such as the deal between America West and US Airways. In some cases, the merged company will take on a completely different name, an option that is much more challenging. This can sometimes pay off at the end, similar to how Verizon was formed when Bell Atlantic and GTE merged in 2000.
Fiat Chrysler and PSA reached a deal to merge their companies in December last year in a massive $50 billion all-stock deal. The merger was meant to help both companies deal with increasing tougher globalization challenges by leveraging their respective scales. At that time, the companies stated that they hope to cooperatively develop new technologies to take on their rivals and to meet stricter environmental regulations.
The cost of shifting to greener technologies and adopting newer technologies is significantly high, particularly for already established automakers. Given this fact, collaborations and mergers have become a sensible option for most companies.
Despite the significant headwinds facing the global automotive industry due to the pandemic, Fiat Chrysler and PSA have stated that they will be moving ahead with the planned merger, which they expect will be completed by the first quarter of 2021.
