Stellantis Initial Shares Rise in European Debut

Stellantis made a positive start on Monday with its shares rising 8% on their European market debut — valuing the business at around 42 billion euros ($51 billion US).

“We have the scale, the resources, the diversity and the knowhow to successfully capture the opportunities of this new era in transportation,” Chairman John Elkann said in a video on the Borsa Italiana website to mark the occasion.

Stellantis CEO Carlos Tavares said the merger would add 25 billion euros in value for shareholders over the years, thanks to projected cost cuts. “I can tell you that the focus from day one will be on the value creation that is the result of the implementation of those synergies,” Tavares said in the same video.

By merging Fiat Chrysler Automobiles (FCA) and Groupe PSA into the new entity Stellantis, the company says it can can cut costs by more than 5 billion euros a year without plant closures. That remains to be seen as Stellantis has over 15 brands to market; from FCA’s Fiat, Alfa Romeo, Maserati, Lancia, Jeep, Dodge and Ram to PSA’s Peugeot, Citroën, Opel and DS.

Over the weekend, PSA shares were exchanged into new FCA shares. All FCA shares were then renamed as Stellantis.

Milan-listed shares of Stellantis started trading today at 12.758 euros and at 1330 GMT were up 8.1% at of 13.59 euros. The Paris-listed shares traded around the same level. FCA closed on Friday at 12.57 euros.

The rise is in part two-fold; with funds buying shares to adjust their portfolio exposures to the new company, and former FCA investors reinvesting part of the proceeds of a 2.9 billion euro special dividend that FCA paid them last week.

The stock will debut in New York on Tuesday, when Tavares will also hold his first news conference as the head of Stellantis.

Intesa Sanpaolo analyst Monica Bosio said she expected markets would start pricing in synergies at Stellantis only once their impact becomes visible from the second half of this year. “However, even excluding synergies, … we continue to view Stellantis as underappreciated on all metrics in comparison with its most direct peers,” Bosio said in a note.

Update —Jan. 19, 2021: Stellantis shares rose more than 11% on their New York debut. In his first press conference as Stellantis CEO, Tavares also said he had created a task force, consisting of Stellantis’ top five executives, to find out “what went wrong” for both FCA and PSA in China.

Both PSA and FCA fared poorly in China, the world’s largest car market. When asked if options could include finding a new local partner, Tavares said the company “would not exclude anything.”

“The purpose is not to be big, but to be great at what we do,” Tavares said.

Tavares went on to say that all Stellantis brands would be given a chance “to rebound” and invest in new products as the group focuses on profitable growth. Stellantis will launch 10 new electrified vehicle models in 2021, he added.

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