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The impressive debut of Stellantis has earned the entity a positive credit rating pulled from the revision of FCA by the S&P Global Rating just before the merger.
Stellantis NV (BIT: STLA), the product of the merger between Fiat Chrysler Automobile, an Italian/American auto producer, and Peugeot SA (EPA: UG), a French Multinational car manufacturer, has made a grand trading debut in Milan and Paris following the completion of the deal between the entities on Saturday. Stellantis stock started trading at 12.758 euros per share with a market cap of 39.2 billion euros ($47.3 billion).
The trading day ended with a 7.57% gain pushing the shares up to 13.52 euros and a boosted market capitalization. The market performance of Stellantis upon its debut shows the positive reception of the stock amongst investors as the new entity looks to chart a new innovation in the ever-evolving auto industry. Today as the market opened, STLA stock is almost 5% up.
As reported by CNBC, Stellantis Chief Executive Officer Carlos Tavares, who also doubles as the former CEO of PSA Group, said in a virtual event on the Borsa Italiana website that the merger would add 25 billion euros in value to shareholders over the coming years due to projected cost cuts. The new entity is said to cut costs of operations by about 5 billion euros ($6.1 billion) on an annual basis and without plant closures. Investors are reportedly anxious to know how Stellantis will be able to pull this off.
“All of our employees and our management teams are totally focused on the value creation that is embedded on the merger of FCA-PSA and the creation of Stellantis.”
The merger has also been touted to give a boosted resources that will give Stellantis a competitive edge in an era when EV demand is skyrocketing.
“We have the scale, the resource, the diversity and the knowledge to successfully capture the opportunity of this new era in transportation,” said Stellantis Chairman John Elkann. “Our ambition is to build something unique, something great, by providing our customers with distinctive, safe, convenient, innovative and sustainable vehicles and mobility services.”
With Its Debut, Stellantis Earned Positive S&P Global Ratings
The impressive debut of Stellantis has earned the entity a positive credit rating pulled from the revision of FCA by the S&P Global Rating just before the merger. Per the rating justification, the S&P Global Rating noted that the new entity will benefit from a robust capital structure as well as favorable geography and scale.
“The combined entity will have a solid balance sheet, good free cash flow prospects and large liquidity buffer,” S&P analysts Vittoria Ferraris and Margaux Pery said in a note. “In our base case, Stellantis’ net cash position will hover at about €14 billion on an unadjusted basis. This will provide the group with a considerable buffer to market conditions, which remain exposed to COVID-19-linked mobility restriction risks during the first half of 2021, and could suffer from the gradual reduction of government support.”
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