Fiat Chrysler Automobiles and French rival PSA Group decided to scrap the 1.1 billion euro ($1.2 billion) dividends that each agreed to pay as part of their merger agreement, citing the negative impact of the global coronavirus pandemic.
Fiat Chrysler and PSA had vowed to each distribute those dividends this year as part of their agreement in December to create the world’s fourth-biggest carmaker. The two also said at the time that as part of the deal, Fiat Chrysler would distribute a 5.5 billion euro ($6 billion) special dividend to shareholders. They made no mention of that payment in their joint statement Wednesday.
The boards of both companies said preparations for the merger are still “advancing well,” and that the deal is on track to close before the end of next year’s first quarter.
The Italian-American automaker is seeking to conserve cash after burning through $5.5 billion in the first quarter while its North American plants were shuttered and new-car demand stalled. PSA laid the groundwork for a possible revision of the payment last month after revealing a 16 percent plunge in first-quarter sales.