Fiat Chrysler and Peugeot’s proprietor PSA said on Thursday that they would join forces via a 50-50 share exchange to produce the world’s fourth-largest carmaker.
The boards of both groups are finalizing talks and will achieve a binding memorandum of understanding in the forthcoming weeks, both firms said in a joint announcement.
FCA’s Chairman John Elkann will seat the joint team, while Peugeot’s Chief Executive Carlos Tavares is going to be the new CEO.
The deal comes at a time when auto manufacturers are working with a worldwide recession in demand and trying to develop technologically innovative, cleaner automobile models to meet more stringent anti-pollution rules.
The merger, once done, is expected to create 3.7 billion euros ($4.1 billion) in annual synergies, with no plant closures, they stated.
French Finance Minister Bruno Le Maire welcomed the deal, saying it might provide the 2 classes the critical mass required to invest in cleaner technology and meet business challenges.
“The authorities will be especially cautious over maintaining (the team’s ) industrial footprint in France,” the finance ministry included in a statement.
The combined team, which is headquartered in the Netherlands, will possess an 11-person plank, together with six associates coming from Peugeot such as Chief Executive Tavares, and five from FCA such as Chairman Elkann.