Fiat Chrysler chairman John Elkann is poised to serve in the same position following a merger with PSA Group. PSA’s Carlos Tavares would serve as CEO.   -  Photo courtesy Fiat Chrysler Automobiles

Fiat Chrysler chairman John Elkann is poised to serve in the same position following a merger with PSA Group. PSA’s Carlos Tavares would serve as CEO.

Photo courtesy Fiat Chrysler Automobiles

(Bobit) — Italian-American Fiat Chrysler and France’s PSA Group announced the terms of a tentative merger deal the automakers hope to close in the coming weeks. The agreement would divide ownership of the $48 billion company equally between FCA and PSA shareholders; FCA shareholders also would be paid a $6.1 billion one time dividend.

The combined company would employ 410,000 people worldwide and produce 8.7 million vehicles per year, ranking it behind the Renault-Nissan-Mitsubishi Alliance and ahead of General Motors as the world’s fourth largest automaker. The affected brands are Fiat, Chrysler, Jeep, Dodge, Ram, Peugeot, Citroën, Opel, Vauxhall, DS, Alfa Romeo, and Maserati.

Read: Report: FCA and PSA in Merger Talks

The company would be headquartered in the Netherlands and Auburn Hills, Mich., and listed on the New York, Paris, and Milan stock exchanges. Fiat Chrysler chairman John Elkann would retain that title, PSA chief executive Carlos Tavares would serve as CEO, and each would occupy one of five seats on the board of directors.

“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.”

In a joint statement, executives said the deal follows “intensive discussions” between senior management teams.

“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,” the statement reads, in part.

Car and truck manufacturers worldwide are grappling with the shift toward electric and self-driving vehicles, both of which demand lofty and ongoing expenditures for research, development, and retooling. Factories that serve the European market also face increasingly strict emissions standards.

The deal could face regulatory scrutiny in Italy and France, where governments and unions may be concerned the merger could result in layoffs. The factories’ joint statement predicted run-rate synergies would produce $4.1 billion in annual savings following an initial investment of $3.1 billion.

“These synergy estimates are not based on any plant closures,” executives noted.

Read: Ford, VW Reach Deal on Global Technology Partnership

Originally posted on Auto Dealer Today

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Tariq Kamal

Tariq Kamal

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Tariq Kamal is the associate publisher of Bobit Business Media's Dealer Group.

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