By Giulio Piovaccari
MILAN (Reuters) - Stellantis, the carmaker created by combining Fiat Chrysler and Peugeot-owner PSA, enjoyed a positive start on Monday, its shares rising 8% on their European market debut and valuing the business at around 42 billion euros ($51 billion).
With annual production of around 8 million vehicles and revenues of more than 165 billion euros, the world's fourth largest auto company is expected to play a key role in the industry's jump into the new era of electrification.
Stellantis will have 14 brands, from FCA's Fiat, Maserati and U.S.-focused Jeep, Dodge and Ram to PSA's traditionally Europe-focused Peugeot (OTC:PUGOY), Citroen, Opel and DS.
"We have the scale, the resources, the diversity and the knowhow to successfully capture the opportunities of this new era in transportation," Chairman John Elkann said in a video on the Borsa Italiana website to mark the occasion.
Chief Executive Carlos Tavares said the merger would add 25 billion euros in value for shareholders over the years, thanks to projected cost cuts.
"I can tell you that the focus from day one will be on the value creation that is the result of the implementation of those synergies," Tavares said in the same video.
Fiat Chrysler (FCA) and PSA have said Stellantis can cut costs by more than 5 billion euros a year without plant closures.
Milan-listed shares of Stellantis started trading at 12.758 euros and at 1330 GMT were up 8.1% at of 13.59 euros. The Paris-listed shares traded around the same level.
That compares with Fiat Chrysler's (FCA) close on Friday at 12.57 euros.
Over the weekend, PSA shares were exchanged into new FCA shares. All FCA shares were then renamed as Stellantis.
A Milan-based trader said part of the rise can be explained by technical reasons, with funds buying shares to adjust their portfolio exposures to the new company.
Also, former FCA investors are reinvesting part of the proceeds of a 2.9 billion euro special divided FCA paid them last week, a second trader said.
The stock will debut in New York on Tuesday, when Tavares will also hold his first news conference as the head of Stellantis.
Intesa Sanpaolo (OTC:ISNPY) analyst Monica Bosio said she expected markets would start pricing in synergies at Stellantis only once their impact becomes visible from the second half of this year.
"However, even excluding synergies, ... we continue to view Stellantis as underappreciated on all metrics in comparison with its most direct peers," Bosio said in a note.
($1 = 0.8293 euros)