FCA and PSA Group approve merger to become world’s 4th-largest automaker

Chris Teague

Chris Teague

The boards of FCA and PSA Group have approved a merger between the two companies.

Earlier this year, Fiat Chrysler Automobiles N.V. nearly merged with Renault. Now, the boards of FCA and PSA Group have agreed to join forces using a 50-50 share swap.

Combined, the company will be worth $50 billion and be located in the Netherlands, where FCA currently has its head office. It will have stock listings in Paris, Milan, and New York. The combined company will maintain a significant presence in their current operating head-office locations in France, Italy and the US.

The new company’s board will consist of 11 members. PSA’s Carlos Tavares will be the company’s CEO and a member of the board while FCA’s John Elkann will be chairman of the board.

A joint statement from the companies cited a, “rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility,” as the reason for the merger and expressed how that, “the combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency.”

Last year, the company had combined sales of 8.4 million vehicles. PSA Group does not currently have a footprint in the U.S. though they have expressed wanting to do so over the past few years, even going so far as to establish an office in Atlanta, Georgia. Much of PSA Group’s sales strength is in Europe while FCA is strongest in North and South America.

The company will be able to utilize manufacturing strategies that will have $4.124 billion in estimated annual run-rate synergies. The automakers say this will come from a shared allocation of resources for large-scale investments in vehicle platforms, powertrains, technology, and purchasing capability. Eighty percent of these synergy are expected to be acheived after four years at a one-time cost of $3.118 billion.

No plants will be closed.

FCA brings the Fiat, Dodge, Ram, Chrysler, Jeep, Alfa Romeo, and Maserati vehicle brands to the table. PSA Group owns Peugeot, Citroën, DS, Opel, and Vauxhall. Both companies have a number of investments in third-party mobility and technology companies.

There is currently no public proposal of a forthcoming name change as the automakers form the joint company.

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