Fiat Chrysler and France's PSA Group agree to 50/50 merger

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Analysts, who questioned whether FCA and Renault had the management expertise to deliver a mega-merger, said Tavares was the right man for the job, having returned Opel to profit after buying it from General Motors in 2017. A Changan representative didn't immediately comment. That includes Chrysler and Dodge, Alfa Romeo and Fiat, Jeep and RAM, Maserati, and the Mopar and SRT tuning brands from the FCA side. The Financial Times reports that emerging technologies make these deals even more important since one company may lack the necessary resources to make needed investments. "I'm pleased with the work already done with Mike (Manley, FCA chief executive) and will be very happy to work with him to build a great company together".

The 50-50 merger is expected to create synergies of more than £3 billion and enough scale to confront what the firms say is "the new era in mobility".

Carmakers globally are facing an expensive upheaval as they attempt to shift away from fossil fuels and toward battery electric vehicles and autonomous technology. This would put the combined group fourth behind Volkswagen, Toyota and the Renault-Nissan Alliance, each at over 10 million units.

Similar to the proposed Renault Group, a merger between FCA and PSA Group would see shareholders from each manufacturer have equal ownership of the newly combined conglomerate that would be overseen by a Dutch parent company.

Milan-listed shares in Fiat Chrysler opened up more than 10% on Wednesday, after ending up more than 7.5% on Tuesday in NY.

Manley called it "an industry-changing combination", and noted the long history of cooperation with Peugeot in industrial vehicles in Europe. PSA executives had been preparing to brief French unions Thursday morning, they said.

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In a statement, French Finance Minister Bruno Le Maire welcomed the deal, saying that the government in Paris would "be particularly vigilant over preserving (the group's) industrial footprint in France". Proven at PSA, it's possible that Tavares is the man to fill the enormous void left by the late Sergio Marchionne at FCA.

In the wake of the announcement, FCA shares in Milan increased to over 9% higher in morning trading.

'This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity, ' said Tavares said in a statement.

A merger of Fiat Chrysler and PSA, the No. 2 for vehicle sales in Europe, would create a regional powerhouse to rival Volkswagen AG, with a stock market value of about $49 billion - comparable to Honda Motor Co. Five board members would be nominated by FCA including John Elkann as Chairman and five would be nominated by Groupe PSA including the Senior Independent Director and the Vice-Chairman.

As part of the agreement, the main shareholders - the Peugeots, the Agnelli family investment arm Exor, as well as the Chinese investor Dongfeng and the French state investment bank - agree to maintain their stakes for seven years.

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