MILAN, Italy / PARIS, France – Fiat Chrysler and Peugeot owner PSA are to join forces through a 50-50 share swop to create the world’s fourth-largest automaker which will likely trigger a new wave of consolidation in the auto industry.
The intention is to create a $50-billion company based in the Netherlands but with listings in Paris, Milan and New York. PSA’s Carlos Tavares will be CEO and FCA’s John Elkann will be chairman.
The move comes less than five months after FCA abandoned merger talks with PSA’s French rival Renault and at a time when automakers are grappling with a global downturn in sales as well as costly new technologies such as self-driving vehicles and cleaner models to meet tough emissions rules.
TWO TEAMS IN MERGER DEALINGS
A joint statement from the two auto giants said: “The supervisory board of Peugeot and the board of directors of Fiat Chrysler Automobiles have each unanimously agreed to work towards a full combination of their respective businesses by way of a 50/50 merger.”
The two management teams will seek to finalise discussions within weeks to create a group with 8.7-million annual vehicle sales while saving 3.7-billion Euros (about R62.5-billion) without even closing any plants and the group umbrella will cover Fiat, Dodge, Ram, Chrysler, Alfa Romeo, Maserati, Peugeot, DS, Opel and Vauxhall.
MASS AND MEDIUM MARKETS THE TARGET
That, the media release sent to The Corner said, ”will allow it to serve mass and premium car markets as well as trucks and light commercials. About 80% of potential synergies, it’s hoped, will be achieved within four years.
The media release added: ”“In a rapidly changing environment, with new challenges in connected, electrified, shared, and autonomous mobility, the combined entity will leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency.”