Fiat Chrysler and Peugeot owner PSA Group have announced the terms of a $48 billion merger that would create the world's third-largest automaker.
They made the announcement Thursday. Spreading the cost of developing electric and autonomous vehicles is a goal. A binding agreement could be finalized within weeks. The combined company would be based in the Netherlands, which is the current headquarters of Fiat Chrysler, but a head office for its North American operations will be near Detroit. The combined company would have roughly 410,000 employees and annual revenues of $190 billion. Once a merger is finalized, PSA Peugeot CEO Carlos Tavares will be chief executive of the new company, with Fiat Chrysler Chairman John Elkann becoming chairman. Fiat Chrysler CEO Mike Manley will have a senior executive role.
After the announcement, Fiat Chrysler shares were trading up 9% at 14 euros in Milan, while PSA Peugeot shares were down 3.2% to 22.84 euros. Fiat Chrysler's strongest brands are Jeep SUVs and Ram trucks and it is focusing on relaunching its premium and luxury brands, Alfa Romeo and Maserati. PSA Peugeot makes mostly small, city-friendly cars, family sedans and SUVs under the nameplates of Peugeot, Citroen and Germany-based Opel. The next step in the deal is expected to be a signing of a Memorandum of Understanding, which could come before the end of the year.