It looks like Fiat Chrysler is shacking up with another French carmaker to create the fourth largest automotive company in the world.
Earlier this year, Fiat Chrysler attempted to merge with Renault in order to save costs on developing new vehicles, electric powertrains, and autonomous driving technologies. The deal looked like it was going to create a new automotive superpower, but there were issues. Chief among them was France putting conditions on the two companies merging. Since France owned a portion of Renault’s shares, the government could place whatever conditions they wanted on any proposed merger, and FCA just couldn’t deal.
Renault’s place in a global alliance with Nissan and Mitsubishi further hampered negotiations until FCA simply walked away from the table.
However, rumors from last summer said that FCA was looking at a different French carmaker to shack up with: Groupe PSA. it turns out those rumors were true as FCA and PSA just announced their plans to combine into a single automotive juggernaut.
We don't have a name for what the merged company will be called, but we do know some numbers. Based on 2018's sales, the combined FCA-PSA company would have annual car sales at 8.7 million, with combined revenue of $190 billion.
It's estimated that the combined company will save $4.13 billion in production costs over the next four years without needing any plant closures, which is certainly going to make the French government happy this time around.
To make things easier, shares will be merged 50/50 so that each company's shareholders will now own a 50% stake in the combined company. The merged company’s HQ would be located in the Netherlands while still being traded in Paris, Milan, and the New York Stock Exchange.
"I'm delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination,” said FCA CEO Mike Manley. “We have a long history of successful cooperation with Groupe PSA and I am convinced that together with our great people we can create a world-class global mobility company."
Expect an official Memorandum of Understanding in the coming weeks.