PSA Group has said that it remains committed to a merger with Fiat Chrysler Automobiles, Automotive News reported, following French media reports that the merger could be threatened by currently developing market conditions as a result of the coronavirus outbreak.

Fallout from the spread of the virus has called into question the financial terms of the merger, according to sources who told the Agence France-Presse news agency. Meanwhile, the terms of the merger deal may have to be renewed, according to French financial daily Les Echos.

In December, the two automakers signed a memorandum of understanding with sights on closing the merger in 12 to 18 months, according to the Automotive News report. The terms of the deal which was agreed to in December would have seen FCA shareholders receive the automaker’s 46% share of French supplier Faurecia, in which PSA holds a controlling interest and which would be spun off as part of the deal.

In the context of the coronavirus crisis, it would be inappropriate to speculate on modifications to the deal conditions, PSA said in a statement. “We are completely focused on protecting our employees and our company. More than ever, this merger makes sense. Our teams continue to work with the same commitment,” the firm said.

Should the merger go through, it would create the world’s fourth-largest automaker group, with the aim of spreading the costs of developing new technologies and taking advantage of larger scales, the report said. In December, the two companies had a combined market capitalisation of around 42 billion euros (RM198 billion), with a slight advantage to FCA. The special dividends were agreed to, in part to equalise the values of the companies, according to the report.

In terms of share prices, FCA’s has dropped from 15 euros (RM70) per share at the end of last October when the merger was announced, to less than 7 euros (RM33) on Thursday for a market capitalisation of around 10.5 billion euros (RM49.6 billion). PSA shares fell from 23 euros (RM108) at end of October to around 12 euros (RM56) on Thursday, for a market capitalisation of 11.2 billion euros (RM52.9 billion). Faurecia’s market capitalisation has dropped by a third, the report said.