The boards of Fiat Chrysler and PSA Peugeot have approved merging the two companies in a move that would create the world’s fourth-largest automaker with combined revenues of $188.8 billion US, the companies announced Thursday.
The 50-50 merger is expected to create synergies of $4.1 billion US, a figure that the automakers expect to achieve without any factory closures — a concern of unions in both France and Italy where the carmakers have more model overlap.
Once a merger is finalized, PSA Peugeot CEO Carlos Tavares will be chief executive of the new company with Fiat Chrysler Chairman John Elkann taking the role of chairman.
The automakers said that the new company would be able to meet the challenges of powertrain electrification, connectivity and autonomous driving “with speed and capital efficiency.”
The combined company will be able to share in the cost of developing those technologies with their “strong global R&D footprint,” they said. They will also save on investments in vehicle platforms and save money with greater purchasing power.
Both companies “share the conviction that there is compelling logic for a bold and decisive move that would create an industry leader with the scale, capabilities and resources to capture successfully the opportunities, and manage effectively the challenges in the new era in mobility,” the statement said.
The merger decision comes about five months after a similar deal with French automaker Renault fell apart.