PSA - 2019 Universal Registration Document

GROUPE PSA Risk factors DPEF.B

The announcementand pendencyof the mergercould adversely affect the Group’s business, cash flows, financial condition or results of operations. The announcement and pendency of the merger could cause disruptions in and create uncertainty surrounding the Group’s business,includingwithrespectto its relationshipswithexistingand future customers,suppliers and employees,which could have an adverse effect on the Group’s business, cash flows, financial condition or results of operations, irrespective of whether the mergeris completed.The businessrelationshipsof the Groupmay be subjectto disruptionas customers,suppliersand other persons with whom the Group has a business relationshipmay delay or defer certain business decisions or might decide to seek to terminate,changeor renegotiatetheir relationshipswith the Group or considerentering into businessrelationshipswith parties other than the Group or the combinedcompany. The risk, and adverse effect, of any such disruptionscould be exacerbatedby a delay in the consummation of the merger. The Group will incur significanttransactioncosts in connection withthemergerand,if themergeris consummated, the combined companywill incur significant integration costs. TheGrouphas incurred,andexpectsto continueto incur,significant costs in connection with the merger, including the fees of its professional advisors. The Group may also incur unanticipated costs associatedwith the transactionand the listingson the NYSE, the Euronext Paris and the MTA of the combined company’s common shares as required in connectionwith the merger, and these unanticipatedcosts may have an adverse impact on the results of operations of the combined company following the effectiveness of the merger. In addition, if the merger is consummated, the combined company will incur significant integrationcosts followingthe consummationof the merger. The Group cannotprovideassurancethat the realizationof efficiencies related to the integrationof the business of the Group with the business of FCA will offset the incremental transaction and integration costs in the near term, if at all. Uncertaintiesassociatedwith the merger may cause a loss of management personnel or other key employees which could adversely affect the future business and operations of the combinedcompany. The Group dependson the experienceand industryknowledgeof its officers and other key employeesto execute its businessplan. The combinedcompany’ssuccess after the consummationof the mergerwill also depend,in part, upon the ability of the combined company to attract and retain key managementpersonnel and other key employees. Current employees may experience uncertainty about their roles within the combined company following the consummationof the merger, which may have an adverseeffecton the abilityof theGroupto retainkeymanagement andother key personnel. While the mergeris pending,the Group is subjectto restrictions on itsbusiness activities. Under the combinationagreement,the Group is subjectto certain restrictions on the conduct of its business and generally must operate in the ordinary course and consistentwith past practice (subjectto certainexceptionsagreedbetweenthe Groupand FCA in the combinationagreement), which may restrict the Group’s ability to carry out certain business strategies.These restrictions maypreventthe Groupfrompursuingotherwiseattractivebusiness opportunities,making certain investmentsor acquisitions,selling assets,engagingin capitalexpenditures in excessof certainagreed limits, incurring certain indebtedness or making changes to its businesspriorto the completionof themergeror terminationof the combinationagreement,as applicable.Theserestrictionscouldhave an adverse effect on the Group’s business, cash flows, financial condition, results of operationsor shareprice.

The Group may not have discoveredcertain liabilities or other matters related to FCA, which may adverselyaffect the future financialperformanceof the combined company. In the courseof the due diligencereviewthat the Groupconducted prior to the executionof the combinationagreement,the Group may not have discovered,or may have been unable to properly quantify, issues relating to FCA which may lead the combined companyto write-downor write-offassets or incur impairmentor other chargesthat could result in losses that may be significant.In addition,even if the due diligencereviewconductedby the Group successfullyidentifiedcertainrisks, unexpectedrisks may arise and previouslyknown risks may materializein a mannernot consistent with the Group’spreliminaryrisk analysis.The shareholdersof the Groupwould notbe compensated for anysuch losses. In addition,the Group expectsthat FCA, like the Group and other automakers,will be significantlyaffectedby developmentsrelated to the currentoutbreakof COVID-19.For example,FCA announced on March 16, 2020 that it plans to temporarilysuspendproduction across the majority of its European manufacturing plants. Furthermore,on March18, 2020FCA announcedthat it has agreed to ceaseproductionat itsplantsacross NorthAmerica. Resalesof the combinedcompany’scommonsharesfollowingthe mergermay cause the marketvalue of the combinedcompany’s common shares to decline. Several referenceshareholdersof the combinedcompanywill be subject to restrictions on share sales for a three-year period followingthe merger,but will be free to sell once thoserestrictions expire. All other shareholders,which will own the majorityof the combinedcompanycommonshares followingthe merger,are not subjectto any resale restrictions. The resale of such shares in the publicmarketfromtime to time or the perceptionthat such resales may occurcouldhavethe effectof depressingthe marketvaluefor the combinedcompany’scommon shares.

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT