(Reuters) – Shares of Fiat Chrysler <FCHA.MI> and Peugeot owner PSA <PEUP.PA> were down on Thursday after the two carmakers said in a coordinated move that they would not pay their planned ordinary dividend on 2019 results.
Fiat Chrysler (FCA) and PSA, which have entered into a binding merger agreement to create the world’s fourth largest carmaker, said in a joint statement on Wednesday that the decision was due to the impact of the COVID-19 pandemic.
By 0750 GMT FCA shares were down 1.3%, while PSA shares were down 2.4%.
Shares in Exor <EXOR.MI>, FCA’s top shareholder, were down by 1.9%
A 1.1 billion euro ($1.19 billion) ordinary dividend for both FCA and PSA was announced in December as part of the binding tie-up agreement between the two automakers.
A source close to PSA said that the withdrawal of both ordinary dividends was a safety measure to protect cash reserves as much as possible and did not change the terms of the deal as both companies agreed to the same.
The coronavirus pandemic has thrown the global auto industry into the worst tailspin since the 2008-09 financial crisis. Consumer demand for vehicles has plummeted as governments across Europe and the United States have enforced lockdowns.
FCA and PSA said on Wednesday that preparations for their planned 50-50 merger were “advancing well”, including with respect to antitrust and other regulatory filings.
The closing of the deal is expected on schedule, before the end of the first quarter of next year, they said.
EU antitrust regulators will decide by June 17 whether to clear the FCA-PSA $50 billion merger, according to a European Commission filing on Monday.
(Reporting by Arunima Kumar in Bengaluru, Giulio Piovaccari in Milan, additional reporting by Gilles Guillaume in Paris; Editing by Shailesh Kuber and Jane Merriman)