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The Fiat and Peugeot logos stand outside dealerships in Saint-Nazaire, France, on Nov. 8, 2019.

STEPHANE MAHE/Reuters

Fiat Chrysler (FCA) and PSA said on Friday they were sticking to the merger plan signed last year after a newspaper said the carmakers were looking at spinning off assets to cut a planned 5.5 billion euro ($6.2 billion) cash payout to FCA shareholders.

A spokesman for FCA dismissed the report on possible changes to the dividend in Italian business daily Il Sole 24 Ore, while PSA said it remained “lucid in the face of the regular speculations to which this merger project is subject”. It added it was implementing the binding agreement signed by the two companies in December.

“The structure and terms of the merger are agreed and remain unchanged,” the FCA spokesman said.

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Italian-American group FCA and France’s PSA plan to finalise their merger by the first quarter of next year.

Il Sole said FCA could conserve cash by handing shareholders assets in place of the special dividend, which has drawn criticism in Italy after the company agreed a 6.3 billion euro state-backed loan to help it through the coronavirus crisis.

Il Sole said talks were at a very early stage and no decision had been taken, adding the aim was to keep the 5.5 billion euro value of the special dividend but to turn it from cash to assets.

Accepting the state-backed loan may not legally bar FCA from paying the dividend, as it is not due until 2021 and would be paid by Dutch parent company Fiat Chrysler Automobiles NV. However, Italian politicians have questioned the appropriateness of such a large cash payout during the crisis.

Options being considered include spinning off the Sevel van business, a 50-50 joint venture between the two groups, which could be valued at between 2.5 and 3 billion euros, or FCA’s Alfa Romeo and Maserati brands, Il Sole said.

Spinning off Sevel could help address European Union concerns about competition in the van segment, but Il Sole said the option looked complicated as it would require PSA to transfer its 50 per cent stake in the unit to FCA.

Another option is scrapping a planned spin-off of PSA’s controlling stake in parts maker Faurecia, Il Sole said.

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A source close to the matter said PSA could instead sell its Faurecia stake before the merger and keep the cash proceeds in the merged company.

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