Stellantis: towards the termination of the joint venture with Gac. And the stock flies to the stock market

Stellantis and Gac have entered into negotiations for the termination of the joint venture that produces and distributes Jeep products in China. The two companies will proceed with the “orderly cessation” of local Jeep production, while Stellantis will recognize a non-monetary write-down charge of approximately € 297 million in the results of the first half of 2022. Stellantis, which should have acquired a majority stake in the joint venture , will focus on the distribution of imported products for the Jeep brand in China and will strengthen the offer of electrified vehicles.
The reaction on the stock market
Positive start for Stellantis in Piazza Affari after the agreement with the partner Dongfeng and the decision to close the joint venture in China with Gac. The shares of the automotive group rose by 1.6% to 12.15 euros, with a maximum reached at 12.208. On the Paris stock exchange, Stellantis gains 1.55%. This morning, before the opening of the European markets, Stellantis announced that – not being able to reach the majority of the joint venture – it will “collaborate” with the Gac Group for an orderly termination of the joint venture established in March 2010, which in recent years has been made a loss, and will recognize a non-monetary devaluation charge of approximately 297 million euros in the results of the first half of 2022 ‘. This means that Stellantis will no longer produce Jeep-branded cars in China and will import Jeep cars destined for the Chinese market from abroad. For Equita, “the effects of this move need to be verified, further demonstrating the difficulties in identifying a solution to increase penetration of the Chinese market”. Also on the Chinese front, on Friday evening, Stellantis announced that it had found ‘an agreement relating to the 99.2 million ordinary shares of Stellantis owned by Dongfeng, which represent 3.16% of the share capital of Stellantis’. Under the agreement, Dongfeng may from time to time make an offer to sell to Stellantis, all or part of the Stellantis common stock held by Dongfeng. Stellantis will have the right, but not the obligation, to accept this proposal and to purchase the Stellantis shares offered at the average closing price per share on Euronext Milan for the period of five trading days immediately preceding the date on which Dongfeng presents the ‘offer”. Furthermore, «in the event that Dongfeng decides to dispose of any part of its Stellantis common stock through an accelerated book build process, Dongfeng will offer Stellantis the opportunity to intervene as principal investor in this transaction, at the offer price resulting from the process. Abb ». For Equita, “the purchase of treasury shares is reasonable also in consideration of the net cash available and allows to eliminate / reduce the risk of Dongfeng’s flowback which was in any case expected to decide to exit sooner or later”.