Citi Research reiterate a Neutral rating on Stellantis (NYSE:STLA) and maintained a 12-month price target on the carmaker of €18.00 following rumors that the Jeep-parent was contemplating a possible merger with French rival, Renault.
Last week, STLA CEO Tavares mentioned in a Bloomberg interview that he sees potential for more mergers and acquisitions due to current industry conditions. He emphasized STLA's competitive scale against new low-cost China BEV players.
There have been reports suggesting the French government is considering a merger between Renault and Stellantis. However, STLA's chairman, John Elkann denied any ongoing merger plans with other manufacturers Monday morning.
“There is no plan under consideration regarding merger operations with other manufacturers”. Said Elkann.
The rationale for a merger of Renault and Stellantis is unclear to Citi analysts, considering their combined high market shares in France and Italy.
“Whilst we agree industry consolidation is likely through the BEV transition, it is not clear to us why a Renault-STLA merger should be the first one.” Wrote Citi analysts in a note.
Additionally, Renault is recovering in competitiveness and profitability. It raises questions about the need for another merger for STLA, which had previously merged with Opel in 2017 and FCA in 2021.
Shares of STLA are down 2.04% in pre-market trading Monday morning.