Shares of Fiat Chrysler and Peugeot owner PSA were down today 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 have entered into a binding merger agreement to create the world's fourth largest carmaker.
They said in a joint statement that the decision was due to the impact of the Covid-19 pandemic.
A €1.1 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 US have enforced lockdowns.
FCA and PSA said that preparations for their planned 50-50 merger were "advancing well", including with respect to competition 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 competition regulators will decide by June 17 whether to clear the FCA-PSA $50 billion merger, according to a European Commission filing earlier this week.