The two firms confirm 50/50 union to create one of world's largest automotive groups

The PSA Group and Fiat Chrysler Automobiles have confirmed plans to merge on a 50/50 basis, firming up yesterday’s news that the two companies were in discussions regarding such a move.

Both firms said today that the discussions would be finalised “in the coming weeks” to reach a binding Memorandum of Understanding, which will create one of the world's largest automotive groups.

They added that the “combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency”.

The likely merger will create a car giant worth around £40 billion and encompass some of the world’s biggest car brands. FCA owns Fiat, Jeep, Alfa Romeo, Maserati, Ram, Lancia and Chrysler, while the PSA stable includes Peugeot, Citroën, DS and Vauxhall-Opel.

The deal would create the fourth largest car manufacturer globally in terms of annual sales, at 8.7m vehicles, behind Volkswagen Group, Toyota and the Renault-Nissan-Mitsubishi alliance, as well as revenues of €170bn (£147bn) and recurring operating profit of over €11bn (£9.5bn).

Today’s announcement also stated there are estimated synergies of €3.7bn (£3.14bn) synergies annually “without any plant closures resulting from the transaction”. This would come from a more efficient allocation of resources for major investments in  vehicle platforms, powertrain and technology as well as purchasing power. The two firms projected that 80% of the synergies would be achieved after four years. 

The shareholders of FCA and PSA will each take a 50 per cent stake in a new Dutch parent company, under the proposals, with the governance structure balanced between the two firms. There would be 11 board members, with five nominated by FCA and five by PSA. Current FCA chairman John Elkann will become the chairman of the new firm, while PSA group boss Carlos Tavares would become the CEO, standing on an initial five-year term.

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PSA Group chief Carlos Tavares is famous for cutting costs - for example, turning Vauxhall into profit in under 12 months of taking ownership - and PSA and FCA claimed the merger would make “among the highest margins in the markets where it would operate,” based on FCA’s strength in the Americas and PSA Group’s in Europe.

As well as broadening the global reach of both firms, the merger will also mean the new entity will comprehensively cover all areas of the market including luxury, premium, volume, trucks and light commercial vehicles.

PSA Group boss Carlos 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.”

FCA chief Mike Manley said: "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 has already been in the news this year regarding mergers. It held extended talks with Group Renault over a possible partnership but those talks broke down after the two firms could not reach an agreement, thought to be hampered by Renault’s alliance with Nissan and the French government.

Tavares led the purchase of Vauxhall-Opel and has been keen to expand the firm for some time, either through partnership or further acquisition. PSA is understood to have previously looked at buying Jaguar Land Rover.

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16

31 October 2019

Although 50/50, I hope much of PSA's product development, foresight and management attributes can wear off on to FCA, especially with regards to the Fiat Group side of things where for far too long now they've shown ineptitude, a lack of clarity and direction, little brand development and no clear product vision which has seen Fiat, Alfa Romeo, Lancia and Maserati stagnate for far too long to the point where the whole Fiat Group is frankly a joke.

31 October 2019
Lanehogger wrote:

Although 50/50, I hope much of PSA's product development, foresight and management attributes can wear off on to FCA, especially with regards to the Fiat Group side of things where for far too long now they've shown ineptitude, a lack of clarity and direction, little brand development and no clear product vision which has seen Fiat, Alfa Romeo, Lancia and Maserati stagnate for far too long to the point where the whole Fiat Group is frankly a joke.

 

Balderdash, plus what johnboy4969 said. Tripe of the highest order, to imagine that BOTH firms had not completed DUE DILIGENCE and understood that as much as each has to offer, they will receive at least as much in return.

 

Imagine not understanding the basics of automotive economics, as to believe that either firm would put itself in harms way, without any thought of the future. If one goes down, as sure as day follows night...the other would also fail.

 

Just shows...anoher keyboard commando, under the influence of some substance, types away and gets roundly rebuked...try again fool.

FM8

1 November 2019
Takeitslowly wrote:

Lanehogger wrote:

Although 50/50, I hope much of PSA's product development, foresight and management attributes can wear off on to FCA, especially with regards to the Fiat Group side of things where for far too long now they've shown ineptitude, a lack of clarity and direction, little brand development and no clear product vision which has seen Fiat, Alfa Romeo, Lancia and Maserati stagnate for far too long to the point where the whole Fiat Group is frankly a joke.

 

Balderdash, plus what johnboy4969 said. Tripe of the highest order, to imagine that BOTH firms had not completed DUE DILIGENCE and understood that as much as each has to offer, they will receive at least as much in return.

 

Imagine not understanding the basics of automotive economics, as to believe that either firm would put itself in harms way, without any thought of the future. If one goes down, as sure as day follows night...the other would also fail.

 

Just shows...anoher keyboard commando, under the influence of some substance, types away and gets roundly rebuked...try again fool.

Do you understand the basics of automotive economics? Please tell us all.

2 November 2019

FM8, guess this keyboard warrior TiS felt an urge to share his wisdom. Apparently he's not aware that despite due diligence and boardroom cuddling, mergers often do not pan out as anticipated. Which will not be the case here, with PSA semi-aquiring FCA. Captain Charly T. simply is too smart a captain at the helm of SS PSA

31 October 2019

LOL - Funny - Fiat has the two biggest selling cars in the small car class by a massive margin, they sell significant amounts of cars all around the globe, yes sales are down, but so are they all as new brands appear and nibble at the sales of others - Alfa has five brand new cars coming in the short to mid term, Maserati has all new models coming next year and for years to come, Lancia is the only one that needs to be shut down, running a 60,000 unit sales per annum company is not viable, like Chrysler, they have 2 cars, one of which is as old as hat, the other is getting there.I suggest you look at the FCA Launch program for the next five years then come back and make a proper comment.

31 October 2019

I keep forgetting that jonboy4969 is the fountain of knowledge on all things motoring and that what they say is gospel and everyone else talks drivel and out of their arses. Still, if it makes them feel superior by appearing to be knowledgeable and slapping down everyone's comment, so be it. Almost like small man syndrome.....

31 October 2019
Saucerer wrote:

I keep forgetting that jonboy4969 is the fountain of knowledge on all things motoring and that what they say is gospel and everyone else talks drivel and out of their arses. Still, if it makes them feel superior by appearing to be knowledgeable and slapping down everyone's comment, so be it. Almost like small man syndrome.....

 

Sounds as if you have small brain syndrome...a lot worse as you have just proved.

31 October 2019
Given the protectionist nature of the Italian and French governments, this is probably bad news for Vauxhall at Ellesmere Port as inefficient French and Italian plants won't be closed due to political considerations.

31 October 2019
odie_the_dog wrote:

Given the protectionist nature of the Italian and French governments, this is probably bad news for Vauxhall at Ellesmere Port as inefficient French and Italian plants won't be closed due to political considerations.

Assuming  that you are right are you saying  that our government should be more protectionist? 

31 October 2019
No, I don't believe so.

The French & Italian govts shouldn't be allowed to subsidise their motor industry in the way they do.

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