The merger will create the fourth-largest automaker in the world.
Following reports this week that discussions about a merger between Fiat Chrysler and Groupe PSA, the French automaker that owns Peugeot, Citroen, Vauxhall, and Opel, were underway, the two companies have officially announced they are joining forces in a 50/50 merger. Discussions will be finalized to reach a binding Memorandum of Understanding in the coming weeks.
As a result, this will create the fourth-largest automaker in the world behind Volkswagen Group, Toyota and the Renault-Nissan-Mitsubishi alliance, with 8.7 million vehicles sold annually. Based on the two company's 2018 financial results, the merger is estimated to result in combined revenues of nearly €170 billion ($189.7 billion) and a recurring operating profit of over €11 billion ($12.2 billion).
The merger between FCA and PSA will be done by a Dutch parent company that will be listed on Euronext (Paris), the Borsa Italiana (Milan), and the New York Stock Exchange.
The merger is estimated to achieve around €3.7 billion ($4.13 billion) in annual run-rate synergies without any plant closures. It's estimated that 80 percent of the synergies will be achieved after four years and costs will be cut by around €2.8 billion ($3.12 billion). The new board will have 11 members. Five will be nominated by FCA and five will be nominated by PSA, with Carlos Tavares as Chief Executive Officer for an initial term of five years. He will also be a member of the Board.
"This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity. I'm pleased with the work already done with Mike and will be very happy to work with him to build a great company together," said Carlos Tavares, CEO of PSA.
"I'm delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination," Mike Manley, CEO of FCA added. "We have a long history of successful cooperation with Groupe PSA and I am convinced that together with our great people we can create a world-class global mobility company."
With the merger now confirmed, Peugeot's planned return to America is now only a matter of time while also allowing FCA to scale up in Europe by gaining access to PSA Group's platforms.