The Italian-American automobile group Fiat Chrysler Automobiles (FCA) and the French car manufacturer PSA, owner of brands such as Peugeot, Citroën and Opel, are negotiating a merger that could result in a company valued at more than 50 billion dollars, according to The Wall Street Journal.
“Following recent reports on a possible business combination between Groupe PSA and FCA Group, Groupe PSA confirms there are ongoing discussions aiming at creating one of the world‘s leading automotive Groups,” the firm said in a brief press release.
The merger of the two groups would create the fourth largest car manufacturer in the world, just ahead of General Motors.
The French government has a 12.23 percent stake in the PSA Group, although it does not have as much control over the company as it does with Renault. The shareholding is completed by the Chinese group Dongfeng and the Peugeot family.
Discussions remain in the early stages and there is no guarantee of a final deal; however, sources familiar cited by The Wall Street Journal say that Carlos Tavares, currently Chief Executive of Peugeot, would become the CEO of the new merged company. John Elkann, president of FCA, would maintain his current role.
News of the merger, which broke minutes before the close of the session at the New York Stock Exchange, was welcomed by the markets and saw shares in Fiat Chrysler rise by more than 7 percent. In Europe, where they are also quoted, Fiat’s shares jumped by 8 percent in the Italian stock market, while those of Peugeot, which are listed in Paris, rose by around 5 percent.
The talks come months after a proposed tie-up between Fiat Chrysler and French carmaker Renault collapsed.
Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.