Fiat Chrysler (FCA) and French Peugeot owner PSA Group have agreed to merge thereby creating a new giant auto manufacturing company with combined revenues of $190 billion and about 410,000 employees.
The move comes less than five months after Fiat Chrysler abandoned merger talks with PSA’s French rival Renault.
Each company will own 50% share of the merged company. Though no hint was given on the named of the new merged company, with a combined vehicle sales of 8.7 million, it is bigger than the likes of General Motors (8.3 million) and just behind Volkswagen and Toyota, which each sold over 10 million.
According to Reuters, this merger would give both companies the scale to help manage a global downturn in auto markets as well as costly investments in new technologies such as electric and self-driving vehicles
The new merged company would be based in The Netherlands, which is the current headquarters of Fiat Chrysler. The current Chairman of Fiat Chrysler, John Elkann, would be the new Chairman while PSA Group’s Chief Executive would be the CEO of the new company.
According to the two companies on Thursday; “Both boards have given the mandate to their respective teams to finalise the discussions . . . in the coming weeks.”
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.
As part of the deal, FCA will pay its shareholders a 5.5 billion euro ($6.1 billion) special dividend and hand them shares in its robot-making unit Comau. PSA, meanwhile, will distribute to its investors its 46% stake in supplier Faurecia.
