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The French OEM is to spin off the automotive seating and components supplier on the occasion of its merger with FCA.
Faurecia, along with Valeo, is one of the two largest French automotive parts suppliers. Employing 122,000 people worldwide, Faurecia generated €17.5 billion in sales in 2018 for an operating margin of 7.3%, the largest in its history. In the light of its merger with FCA, Groupe PSA is to sell its 46% stake in Faurecia to its shareholders, with FCA also said to pay an exceptional dividend of €5.5 billion. Upon the announcement on October 31, Faurecia’s shares were down 6%, before declining another 2.3%.
According to some experts, mergers between OEMs are not favourable to equipment suppliers due to pressure on purchasing and prices; Groupe PSA's shares were trading 6% lower, while that of FCA increased 10%. The real cost for the PSA shareholders will largely depend on the share price of Faurecia. “It's a good deal, but it's slightly more favourable to FCA shareholders, with PSA shareholders having to accept a higher market risk factor”, a specialist told French media L’Argus. With a solid financial structure and well outlined future directions, Faurecia is expected to continue with a strong growth cycle.
Faurecia focusses on three main businesses: Seating (43%), Interiors (31%), and Clean Mobility (26%), and has a varied customer portfolio; Volkswagen Group (19%), Ford (16%), PSA (14%), Renault-Nissan-Mitsubishi Alliance (13%), FCA (7%), GM (5%), BMW (5%), Daimler (5%), Chinese manufacturers (4%), and Hyundai-Kia and Jaguar Land Rover (2%).
Source: L’Argus/Le Figaro