PSA discusses merger with Fiat Chrysler – Les Échos

Everyone was waiting for a possible resumption of
discussions between Renault-Nissan and Fiat Chrysler,

    but it is ultimately PSA that would be very close to a merger agreement with the Italian-American group. Tuesday evening, several sources confirmed intensive discussions between the two car manufacturers,
revealed by the Wall Street Journal,

    that could lead to the creation of a $ 50 billion market capitalization giant.

Both groups refuse to comment. One of the options studied would be a merger by share exchange, continues the daily quoting sources close to the file. Carlos Tavares, chairman of Peugeot's board of directors, will lead the new group while John Elkann, president of Fiat Chrysler Automobiles (FCA) and head of the Agnelli family who controls the Italian-American manufacturer, will retain his functions in the new entity.

"Friendly" state of mind

The combination of the two groups would create a new global giant. Just after the publication of the Wall Street Journal article, the Fiat-Chrysler course flew to New York, gaining more than 6%. Between them, manufacturers based in Paris and Turin sold 8.7 million vehicles last year: a union would immediately become the world number 4 in the sector, behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota, which is hold them in a handkerchief. But on the European market, the new pair would sell almost as many cars as the German group VW, the local leader.

The hypothesis of a rapprochement between French and the Italian-American group is not new. The two bosses Carlos Tavares and Mike Manley have already acknowledged that they would consider meaningful partnerships for each of their companies. In March, they had met at the Geneva Motor Show but, at the time, PSA approaches had somewhat cooled FCA, which had set its conditions. And the question of the distribution of plant closures between France and Italy was delicate. The negotiations were then suspended, without being really abandoned. "If ever something was done, it would be in a friendly state of mind and in a win-win logic"nevertheless, a French source told Les Echos.

PSA and Fiat, two family businesses, have known each other since the dawn of time. In 1978, they signed their first cooperation agreement, first to realize utilities, then large minivans, in France and Italy. Agreement signed at the time by Patriarch Gianni Agnelli, grandfather of John Elkann. Cooperation, which even expanded later (in 2005) to Turkey.

Synergies study

For more than a year, contacts have gone much further. PSA and Fiat
thoroughly investigated potential synergies

    from a merger, and discussed more or less actively, according to our information. But the imbalance of the respective shareholdings of the two families in the capital, that of the Agnelli at Fiat (28%) and the Peugeot at PSA (more than 13%) complicates the transalpine discussions.

Last June, Fiat Chrysler (FCA) had then preferred to discuss with the other French manufacturer Renault but announced with a crash the withdrawal of its offer of merger to 30 billion euros with it, showing the political context in France. have compromised this project. The Japanese partner Nissan, openly excluded from the deal, had not validated the operation and the role of the French state, the largest shareholder of Renault had also been singled out as the cause of failure. Whereas Fiat seemed
leave the door open for further discussion

   Renault-Nissan president Jean-Dominique Senard had said before the summer that the project was stopped.

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