Fiat Chrysler Automobiles and 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 said they would each distribute those dividends this year as part of their agreement in December to create the world’s fourth-biggest automaker.
The two automakers 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.
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.
FCA is seeking to conserve cash after burning through $5.5 billion in the first quarter while its 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.
EU antitrust regulators will decide by June 17 whether to clear the merger, according to a European Commission filing on Monday.
Reuters contributed to this report