MILAN/PARIS: Fiat Chrysler and Peugeot owner PSA plan to join forces through a 50-50 share swap to create the world’s fourth-largest automaker, they said on Thursday, triggering a new wave of consolidation in the car industry.
Fiat Chrysler (FCA) and PSA said they aimed to reach a binding deal to create a $50 billion company domiciled in the Netherlands, with listings in Paris, Milan and New York and with PSA’s Carlos Tavares as CEO and FCA’s John Elkann as chairman.
The move comes less than five months after FCA abandoned merger talks with PSA’s French rival Renault and at a time when carmakers are grappling with a global downturn in demand, as well as costly new technologies such as self-driving vehicles and cleaner models to meet tough new emissions rules.
“The Supervisory Board of Peugeot SA and the Board of Directors of Fiat Chrysler Automobiles NV have each unanimously agreed to work towards a full combination of their respective businesses by way of a 50/50 merger,” the companies said in a joint statement.
The management teams of FCA and PSA will seek to finalise the discussions in the coming weeks to create a group with 8.7 million in annual vehicle sales and make savings of 3.7 billion euros ($4.1 billion), even without plant closures, they said.
The multi-brand group will include the Fiat, Dodge, Ram, Chrysler, Alfa Romeo, Maserati, Peugeot, DS, Opel and Vauxhall brands, allowing it to serve mass and premium passenger car markets as well as trucks and light commercial vehicles.
Around 80 per cent of potential synergies could be achieved within four years, at a cost of 2.8 billion euros, the companies said.
French Finance Minister Bruno Le Maire welcomed the deal, saying it would give the two companies the critical mass needed to thrive in a fast changing industry.
Paris, which has a 12 per cent stake in PSA, was blamed for the collapse of FCA’s merger talks with Renault as it urged the French firm to focus on its existing alliance with Japan’s Nissan. The French government also owns 15 per cent of Renault. The combined group will
have an 11-person board, with six members coming from PSA including Chief Executive Tavares, and five from FCA including Chairman Elkann.— Reuters
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