Tie-up of Italian and French firms would create world’s fourth-biggest carmaker
The two companies said the merger would generate cost savings without closing factories.
Photograph: Marco Bertorello/AFP/Getty Images
The boards of Fiat Chrysler Automobiles (FCA) and the Peugeot owner, Groupe PSA, have approved a €40bn (£35bn) merger that would create the world’s fourth-biggest carmaker.
The Italian and French companies said the 50-50 tie-up would create a company with annual vehicle sales of 8.7m, revenues of €170bn and operating profits of more than €11bn. It is expected to generate cost-savings and other benefits of €3.7bn, without any factory closures, the companies said.
Carlos Tavares, the chief executive of PSA, which also owns Vauxhall and Citroën, will become chief executive of the new company, while the Fiat chair, John Elkann, will become its chair.
News of the merger talks on Wednesday raised fears for the jobs of 1,100 workers at Vauxhall’s factory in Ellesmere Port, Cheshire. The Unite union, which represents employees at the plant, has been seeking urgent meetings with PSA bosses.
In June, the company warned the future of the site depended on a good Brexit deal. A further 1,200 workers make Vauxhall vans in Luton, Bedfordshire.
The agreed deal comes months after a similar merger attempt between FCA and PSA’s French rival Renault fell apart, with the companies blaming the intervention of the French government, Renault’s largest shareholder.
The French state also owns 12% of PSA after bailing the carmaker out in 2014. However, the failed Renault proposal was complicated by its alliance with the Japanese carmaker Nissan, and analysts are more confident this deal will go through.
Michael Hewson, the chief market analyst at CMC Markets UK, said the agreed tie-up suggests “any concerns the French government may have had have been allayed. The lack of pushback by the French government may be down to assurances on job losses, which could well be bad news for car plants, outside of France and Italy, with the UK an obvious target. Any deal will still need to be scrutinised by regulators, but there remains little in the way of overlap outside of markets in Europe.”
The joint statement on the merger said: “The plan to combine the Groupe PSA and FCA businesses follows intensive discussions between the senior managements of the two companies.
“Both share the conviction that there is compelling logic for a bold and decisive move that would create an industry leader with the scale, capabilities and resources to capture successfully the opportunities and manage effectively the challenges of the new era in mobility.”