PSA Group and Fiat Chrysler Automobiles (FCA) have confirmed plans for a merger, with a final agreement expected in the coming weeks.
Both businesses have unanimously agreed to a 50:50 merger resulting in a company that will be the fourth largest auto-maker in the world, selling more than 8.7 million vehicles each year.
The merged entity will bring together the companies’ capabilities in the technologies shaping the new era of sustainable mobility, including electrified powertrain, autonomous driving and digital connectivity.
Annual cost savings of £3.2bn are expected as a result of the deal, with no planned plant closures.
The Board would be composed of 11 members. 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). The chief executive officer would be Carlos Tavares for an initial term of five years and he would also be a member of the Board.
Tavares said: “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 Mike and will be very happy to work with him to build a great company together.”
Mike Manley, FCA CEO, added: "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."
FCA previously sought a merger with PSA-rival Renault earlier this year, but the deal was unsuccessful
It successfully acquired Vauxhall from General Motors in March 2017, following a platform sharing agreement that lead to the co-development of the Peugeot 3008 and Vauxhall Grandland X. All future Vauxhalls are expected to sit on PSA platforms.
It is unclear how the FCA fleet operations would be affected by a merger with PSA, but Vauxhall’s fleet team has remained separate from PSA’s corporate sales team.