Italian-American automakers Fiat Chrysler and French PSA are discussing the conditions for a $ 50 billion marriage potential on Wednesday to join forces at a time when the automotive industry is struggling.
The two groups, which employ 400,000 people worldwide, have confirmed they are in talks to create the world's number four in the sector.
According to concordant sources, PSA held its board Wednesday afternoon. And Fiat Chrysler Automobiles (FCA) must meet his in the evening, according to a source familiar with the matter.
According to the same source, companies could quickly announce that they are in exclusive negotiations, or even confirm the transaction on Thursday.
And the idea seems to seduce a wide range of actors.
Markets first, since the price of PSA rose 4.5% on the Paris Bourse and that of Fiat Chrysler Automobiles (FCA) jumped more than 9% in Milan.
The unions then: Force Ouvrière, the first union at PSA, highlighted a "positive industrial dynamic" of the project and the CFE-CGC, number two, retains that there is "no plan for closure of the site in France".
The French government, so reluctant a few months ago when FCA tried, unsuccessfully, to marry Renault, said it was "particularly vigilant" on employment. But the state, shareholder in about 12% of PSA via BpiFrance, also believes that the discussions "confirm the global consolidation movement of the automotive industry, which is necessary and in which France wants to take its place.
Italian Deputy Minister of Economy Antonio Misiani said it was "vital to preserve the sites" in his country. He stressed in the same vein that there is a "paradigm shift in the automotive market with the switch to electric", making "necessary heavy investment and consolidation".
These discussions come just months after the bitter failure of a proposed merger between Fiat Chrysler and Renault, the number one French car.
Fusion between equals?
The terms of the marriage are yet to be defined, even if a source familiar with the matter confirmed to AFP the information of the Wall Street Journal: namely a merger between equals with exchange of shares, while noting that other options were also on the table.
The potentially thorny issue of the headquarters of the future entity has not been decided, but the hypothesis of the Netherlands is on the table, according to the same source.
The chairman of the PSA board Carlos Tavares would become managing director of the new entity, whose board of directors would be chaired by Fiat Chrysler boss (FCA) John Elkann, heir to the Agnelli dynasty.
The market value of the merged entity is estimated at around 50 billion dollars (45 billion euros).
Such a merger would bring the new entity into the college of industry behemoths behind Volkswagen, the Renault-Nissan-Mitsubishi alliance and Toyota.
PSA sold 3.9 million vehicles last year, for a turnover of 74 billion euros. FCA has sold 4.8 million vehicles, for 110 billion euros. The couple controls the Alfa Romeo, Chrysler, Citroën, Dodge, DS, Jeep, Lancia, Maserati, Opel, Peugeot and Vauxhall brands.
At a time when the global automotive market is facing a sluggish economy, and major technological challenges related to the rise of electric vehicles, "it is a remarkable rebound for PSA, which had come close to death in 2012", observed Michael Hewson, broker analyst CMC.
The builder was saved from bankruptcy only by the entry into its capital of the French State and Chinese Dongfeng, alongside the other major shareholder, the Peugeot family.
A merger would allow PSA to return through the big door to the US market thanks to the Jeep and Dodge RAM pickups of his fiance. Fiat Chrysler on its side would consolidate its positions in Europe, where the group suffers from not having sufficiently renewed its range.
The games are however far from being made, with this "bulky comrade" that is the French State, as described by Mr. Hewson. In its negotiations with Renault, Fiat Chrysler had quickly thrown in the towel, unable to obtain a commitment from the French manufacturer, curbed by the state shareholder.
burs-pid / eb
30/10/2019 18:26:32 –
Paris (AFP) –
© 2019 AFP