Fiat Chrysler and Peugeot maker PSA have reached a binding agreement over their $50 billion merger. The two corporations have yet to announce a new name for the company. NordLB Auto analyst Frank Schwope said after the announcement that “...the merged group will have to make massive savings and probably also close plants, even if the CEOs’ choice of words is different.”

First Steps

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Italian-American Fiat Chrysler and France’s PSA will now start work on delivering their pledge to cut costs by $4.1 billion per year without closing any factories. It is expected to be a difficult task due to politicians and powerful labor unions in both France and Italy being concerned about job losses that come from a combined business that will employ about 400,000 people.

Reasons For The Merger

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The two companies are hoping that the merger will help them cope with slowing auto sales and the expenses that are expected to come from building cleaner cars that have to meet tougher emissions regulations. Both PSA and FCA are “currently lagging far behind the competition in terms of technology and product range,” said Schwope.

Finishing The Deal

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Fiat Chrysler and PSA said in a statement that they expect the deal to close over the course of the next 12 to 15 months, and expect to come up with a name during that time. Before the merger is completed, China’s Dongfeng Motor Group, one of PSA’s shareholders, will cuts its 12.2 percent stake in the French firm by selling 30.7 million shares to PSA.

Sources: Fiat-Chrysler and PSA