Stellantis N.V. STLA recently announced that it has executed a heads of agreement (HoA) with Dongfeng Motor International Co. Limited, a subsidiary of Dongfeng Motor Group Company Limited. The agreement is related to the 99.2 million common shares which Dongfeng holds in Stellantis, representing 3.16% of Stellantis’ share capital. Under the HoA, Dongfeng may submit an offer to sell to Stellantis, all or a portion of the common shares it holds, from time to time. Stellantis will have the right but will not be obliged to accept the offer. Stellantis will purchase the offered shares at the average of the closing prices per share, on Euronext Milan, for the five trading-day period, immediately, prior to the date on which Dongfeng submits the offer.
In the event, whereby Dongfeng determines to dispose of any of its Stellantis’ common shares through an accelerated book build process, it will offer the latter an opportunity to act as a cornerstone investor in the transaction, at the offer price resulting from the mentioned process.
Any purchase of Stellantis’ common shares by the company itself, from Dongfeng, will be carried out under the authority granted by the general meeting of Apr 13, 2022, as possibly renewed or extended.
Stellantis will notify the market if it accepts an offer from Dongfeng and if it agrees to purchase the offered shares.
Previously, Stellantis had announced its plan to take a majority share of the GAC-Stellantis joint venture. However, a lack of progress has initiated talks of termination of the joint venture that produces and distributes Jeep products in China.
Stellantis and GAC intend for an orderly termination of local Jeep production, while the former will recognize a non-cash impairment charge of nearly €297 million in first-half 2022 results.
Stellantis will focus on supporting Jeep customers in China via electrified line-up of imported Jeep vehicles and experienced China-based dealers.
Shares of STLA have lost 32.3% over the past year compared with its industry’s 28% decline.
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Zacks Rank & Key Picks
STLA carries a Zacks Rank #5 (Strong Sell), currently.
Better-ranked players in the auto space include BorgWarner BWA, sporting a Zacks Rank #1 (Strong Buy) and LKQ Corporation LKQ and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
BorgWarner has an expected earnings growth rate of 23% for 2023. The Zacks Consensus Estimate for current-year earnings has been revised 0.3% upward in the past 30 days.
BorgWarner’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. BWA pulled off a trailing four-quarter earnings surprise of 33.1%, on average. The stock has declined 25.5% over the past year.
LKQ has an expected earnings growth rate of 6.3% for 2023. The Zacks Consensus Estimate for current-year earnings has been constant in the past 30 days.
LKQ’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. LKQ pulled off a trailing four-quarter earnings surprise of 23.55%, on average. The stock has risen 2.8% in the past year.
Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.
Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has risen 8.2% over the past year.
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