Fiat Chrysler and Peugeot join forces to create world's No.4 carmaker

This post was originally published on this site

https://i-invdn-com.akamaized.net/trkd-images/LYNXMPEF9U0GN_L.jpg

MILAN/PARIS (Reuters) – Fiat Chrysler (MI:) and Peugeot’s owner PSA (PA:) said on Thursday they would join forces through a 50-50 share swap to create the world’s fourth-largest automaker.

The boards of the two groups have mandated their respective teams to finalise discussions and reach a binding memorandum of understanding in the coming weeks, the two automakers said in a joint statement.

FCA’s Chairman John Elkann will chair the combined group, while Peugeot’s Chief Executive Carlos Tavares will be the new CEO.

The deal comes at a time when car makers are grappling with a global downturn in demand and looking to develop technologically advanced, cleaner car models to meet ever more stringent anti-pollution rules.

The merger, once completed, is expected to generate 3.7 billion euros ($4.1 billion) in annual synergies, without any plant closures, they said.

Prior to the completion of the deal, Fiat Chrysler (FCA) will pay its shareholders a 5.5 billion euro special dividend and hand them its shares in its robot-making unit Comau, they said.

In addition, Peugeot will distribute to its shareholders its 46% stake in auto-part maker Faurecia (PA:).

French Finance Minister Bruno Le Maire welcomed the deal, saying it would give the two groups the critical mass needed to invest in cleaner technologies and meet industry challenges.

“The government will be particularly vigilant over preserving (the group’s) industrial footprint in France,” the finance ministry added in a statement.

The combined group, which will be headquartered in the Netherlands, will have an 11-person board, with six members coming from Peugeot including Chief Executive Tavares, and five from FCA including Chairman Elkann.

Shares will be listed in Paris, Milan and New York.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.