The Fiat Chrysler Group and Groupe PSA have opened discussions for the creation of a new group which would create the 4th largest global OEM in terms of annual unit sales (8.7m vehicles). The merged entity’s global scale and resources will be owned 50% by Groupe PSA shareholders and 50% by FCA shareholders. At its inception, the combined company would realize among the highest margins in the markets where it would operate, based on FCA’s strength inNorth America and Latin America and Groupe PSA’s in Europe.
For the uninitiated, Fiat Chrysler Automobiles (FCA) is a global automaker that designs, engineers, manufactures and sells vehicles in a portfolio of brands, including Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram and Maserati. It also sells parts and services under the Mopar name and operates in the components and production systems sectors under the Comau and Teksidbrands. FCA employs nearly 200,000 people around the globe. On the other hand, Groupe PSA employs 210,000 people and owns brands like Peugeot, Citroën, DS, Opel and Vauxhall.
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The combination would unite the groups’ respective brand strengths across luxury, Premium, Mainstream Passenger Car, SUV and Trucks & Light Commercial vehicles. The merged entity would bring together the companies’ extensive and growing capabilities in the technologies shaping the new era of mobility, including electrified powertrain, autonomous driving and digital connectivity. The proposed tie-up would reportedly create a new giant with 8.7 million vehicle sales, $190 billion in turnover and a combined 400,000 employees. FCA’s John Elkann would act as the Chairman and Peugeot’s Carlos Tavares will become as CEO and member of the Board. Both boards have given the mandate to their respective teams to finalize the discussions to reach a binding Memorandum of understanding in the coming weeks.
The proposed combination would create the 4th largest global auto brand in terms of unit sales, with combined revenues of nearly €170 billion and recurring operating profit of over €11 billion on a simple aggregated basis of 2018 results excluding Magneti Marelli and Faurecia. These synergy estimates are not based on any plant closures and it is projected that 80% of the synergies would be achieved after 4 years. The total one-time cost of achieving the synergies is estimated at €2.8 billion.
The new group’s Dutch-domiciled parent company would be listed on Euronext (Paris), the Borsa Italiana (Milan) and the New York Stock Exchange and would continue to maintain a significant presence in the current operating head-office locations in France, Italy and the US.