Last week's news that PSA Group and Fiat Chrysler Automobiles signed a memorandum of understanding to define their planned merger came off without any delays, drama or disruption — which itself is a remarkable feat in these turbulent times.
The boards' approval of the legal document may not be as dramatic as the initial announcement of a deal or the closing, when new shares of the merged company are distributed and start trading. But it's an important step.
We now have a clearer picture of the timing: The new company should come into being late next year or early in 2021. So Canada's Unifor union will negotiate the fates of assembly plants in Windsor and Brampton next year with FCA, not with the merged company.
Twelve to 14 months seems like a long way off, but don't let that lag minimize in the mind's eye the impact of this massive combination.
Not only is the old Chrysler Corp. changing ownership structure for a fourth time in less than 25 years, it will become part of the world's fourth-largest automaking group, one that is bigger than either General Motors or Ford.
Such a notion would've been unthinkable not that long ago. GM was long the world's largest automaker until about a decade ago. And as recently as 1999, GM and Ford were the two biggest companies in America by revenue, according to Fortune magazine's annual rankings. Now, Ford is No. 12 and GM ranks 13th.
Perhaps the most significant element of the PSA-FCA memorandum of understanding is that it got done in the expected time frame, with no drama visible to the outside world.
It's not like there wasn't the chance for it. GM sued FCA last month, accusing it of racketeering to buy off the UAW, weaken GM and try to force it into a merger long coveted by the late Sergio Marchionne. If GM were to win its case — with triple damages — the costs to FCA could be devastating.
But CEO Carlos Tavares and PSA didn't flinch. They stand by FCA's characterization of the suit as meritless and didn't renegotiate the share exchange or the composition of the combined company's board.
There's still a lot we don't know. We don't know the name of the new company. We don't know what FCA CEO Mike Manley's role will be — or any job below the CEO level, for that matter. We don't know what the combined company will do when faced with massive overcapacity in Europe or whether all of its brands will survive.
But we know that PSA and FCA should be stronger together, with greater scale and purchasing power. Chairman John Elkann tied too-small Fiat first to the Chrysler Group — with its mighty Ram and Jeep lines — and now to PSA and its flexible platforms. The Auburn Hills crew may have the scale now to withstand a downturn, which is a remarkable turn of events after the last recession nearly did it in. And Tavares, the veteran of Renault and Nissan who had offered to run GM or Ford, is expanding PSA's reach to include North America.
It might take awhile, but this merger process is chugging along and promises to stir up plenty of disruption when it gets done.