Fiat Chrysler Automobiles (FCA) and Peugeot S.A. (PSA) announced on Wednesday that they have signed a binding agreement for a 50-50 merger of their businesses. The deal will create the world’s third largest car manufacturer by revenue and the fourth largest by automobile sales, trailing only Volkswagen, Toyota and the strategic alliance between Renault, Nissan and Mitsubishi Motors.
Fiat Chrysler, the group behind popular brands such as Jeep, Dodge, Ram and Alfa Romeo, was the eighth largest automobile group in the world last year, selling 4.65 million vehicles in total. Adding Peugeot’s sales of 3.88 million cars, the newly formed company would leapfrog Honda, For, Hyundai and General Motors to become number four in the increasingly consolidated car industry.
“With its combined financial strength and skills, the merged entity will be particularly well placed to provide innovative, clean and sustainable mobility solutions,” the announcement of the deal reads, adding that the merger would create €3.7 billion in annual run-rate synergies, mainly thanks to technology, product and platform-related savings as well as scale effects in purchasing. The deal is still subject to shareholder and regulatory approval and could be completed in 12 to 15 months.
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