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By Charl Bosch

Motoring Journalist

FCA and PSA confirms merger talks are underway

Expected merger will result in total vehicle production of 8.7-million units

Fiat Chrysler Automobiles (FCA) has officially confirmed that is has entered negotiating talks with the PSA Group regarding a merger that would result in the world’s fourth largest automaker.

In a joint statement released earlier today (31 October), the Italian-owned US manufacturer and French parent company of Peugeot, Citroën, DS Automobiles, Opel and Vauxhall, said the plan will result in a combined revenue of €170-billion (R2.8-trillion) and recurring profits of €11-billion (R185.6-billion), with each receiving a 50% shareholding of the company with the actual structure set to be balanced between shareholders and directors.

While the initial transaction will be rest on the merger of a reported Dutch parent company, the 11 member board will consist out of five nominated members FCA of which its Chairman, John Elkann, will serve as Chairman, while PSA will also choose five members and have its CEO, Carlos Tavares, assume the position of CEO. The final member will be submitted by both in the case of a deadlock.

In addition, the mentioned Dutch parent company will be listed on the Paris, Milan and New York Stock Exchanges, while the respective by-laws will be drawn-up to avoid providing voting rights to a single shareholder exceeding 30%.

“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 [FCA CEO) Mike (Manley] and will be very happy to work with him to build a great company together,” Tavares said.

In a similar reaction, former Jeep division boss Manley, who replaced late former FCA CEO Sergio Marchionne in July last year, remarked, “I’m delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination. 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”.

The expected partnership between PSA and FCA, whose list of marques includes Chrysler, Dodge, Ram and Jeep, as well as Alfa Romeo, Fiat, Lancia and Maserati, is expected to result in total vehicle production of 8.7-million units, which will see it going up against Toyota, Volkswagen, the Renault-Nissan-Mitsubishi Alliance, Ford, General Motors and Hyundai/Kia.

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