To make the fourth-biggest carmaker by output in the world, Peugeot owner PSA and Fiat Chrysler have come to a merger pact. The two firms said they have inked a “combination agreement” that would create an “industry leader” with the ability to back new technologies and bigger scale, the Financial Times reported.
Plants will reportedly not close due to the merger, and the firms expect to lead an annual €3.7 billion in cost savings. The new entity would be valued at approximately €41.1 billion based on their respective market capitalizations prior to Wednesday morning (Dec 18). Carlos Tavares of PSA would be the chief executive with an original five-year mandate, and John Elkann will be chairman.
It is said the arrangement will remake the car sector as it goes through a time of transformation, and as spending is needed to create self-driving systems and electric vehicles. It will create a group with over €11 billion in recurring operating profit, total vehicle sales of 8.7 million and a workforce that is 400,000 strong. The firm’s sales would come out ahead of Volkswagen in Europe.
FCA and PSA reportedly said they foresee the transaction will face regulatory clearances and shareholder approval, and would be completed within 12 to 15 months. FCA’s stock remained steady, while PSA’s shares were up 1.5 percent on Wednesday morning.
In separate news, FCA and self-driving startup Aurora have teamed up to make autonomous commercial automobiles. Aurora, which is backed by Sequoia Capital and Amazon, will integrate its technology into FCA’s Ram Truck vehicles. FCA’s Fiat Professional brand could also possibly be part of the agreement, according to reports at the time. The financial terms of the deal were not made known. Once the cars are made, they could possibly be used by any third-party company for self-driving delivery vans.