PARIS -- PSA Group CEO Carlos Tavares pushed back against suggestions that the terms of its merger agreement with Fiat Chrysler Automobiles should be revised because of the impact of the coronavirus crisis.
The "time has not come to discuss this issue," Tavares said when asked if terms could be revised to reflect the downturn in the global auto industry.
The deal has become even more vital because of the crisis and to speed up cost savings, Tavares told PSA's annual shareholder meeting on Thursday. "The merger with FCA is the best among the solutions to cope with the crisis and its uncertainties," he said.
A French investor in PSA, Phitrust, said this week that the merger terms should be modified to reflect the impact of the COVID-19 pandemic and FCA’s declining prospects.
FCA has received guarantees for a 6.3 billion euro loan backed by the Italian government, while PSA's strong balance sheet has helped it to weather the economic slump caused by measures to contain the spread of the coronavirus.
As part of the agreement, FCA has agreed to pay its shareholders a special one-time dividend of 5.5 billion euros, an amount that would have equalized the market capitalizations of the two automakers. But since the crisis, both companies have seen their share price fall sharply.
"We have to act as professionals. We have signed a binding agreement," Tavares said on Thursday in response to a question from Phitrust on whether the terms should be changed.
"The agreement is based on a balance on which we have worked hard and for a long time. It's a fine, relevant balance vis-a-vis the two companies, the shareholder base and the countries. Today is not the time to look at things you raise in your question," Tavares said.
FCA Chairman John Elkann has said the terms of the deal "are set in stone as binding contracts in their nature are." Elkann was speaking on May 20 in a conference call after the annual shareholder meeting of Exor, the Agnelli family holding company which controls FCA.