PSA and Fiat Chrysler make engagement official

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Fiat Chrysler and Peugeot owner PSA are in talks over a potential tie-up that could create a $50 billion giant better placed to tackle a host of costly technological and regulatory challenges facing the global auto industry.

The two firms confirm a 50/50 union to create one of world's largest automotive groups. Peugeot share rose more than 6% to hit their highest in more than 11 years.

'If PSA wants to use a great British brand like Vauxhall to sell cars and vans in the United Kingdom, then it has to make them here in the United Kingdom'.

The parent company of the merger will be Dutch-domiciled. Both have strong shareholder participation by the founding families - the Peugeots in France and the heirs to the Agnelli family in Italy, represented by Elkann.

The particular person mentioned Carlos Tavares, the chief government of Peugeot's father or mother, Groupe PSA, would lead the brand new firm as CEO whereas John Elkann, chairman of FCA, can be chairman.

Analysts greeted word of a possible deal warmly. FCA shares in Milan closed up nine percent on Wednesday while PSA shares added four percent in Paris.

PSA shares fell as much as 14% to a two-week low of €22.33.

"This operation would give both groups the necessary size to carry out the investments needed to face the challenges of energy transition, electrification and shared, autonomous and connected driving", Le Maire said in a statement.

The partnership would also unify research and development efforts while strengthening the presence of both automakers in all market segments, including luxury, premium, and mainstream passenger cars, as well as in crossovers, SUVs, light-duty trucks, and commercial vehicles. Fiat Chrysler's directors approved an agreement in principle Wednesday, pending a formal deal, they said.

"FCA and Peugeot are both lousy in China, they just lose money", Dudenhoeffer said.

The companies' Chinese businesses have been trailing competition and it's unlikely that a merger would quickly reignite their revenue growth in the world's biggest vehicle market.

The French state also owns 12% of PSA after bailing the carmaker out in 2014. The deal appeared to be moving forward quickly, at least until Renault's own Japanese affiliate, Nissan, began raising objections.

Fiat Chrysler is the world's seventh-largest automaker, producing vehicles under the well-known brands Jeep, Dodge, Ram and Italian brand Alfa Romeo.

Fiat Chrysler has been looking for a partner for a long time. The boss of bosses would be Carlos Tavares for five years.

Fiat Chrysler has a larger global footprint than Peugeot, whose focus is on Europe, where it is the second-largest carmaker.

"It is hard not to see that this attempt by Fiat might well go the same way as the failed Renault attempt earlier this year", wrote Hewson.

In 2017, Peugeot bought General Motors' Opel and Vauxhall brands for $2.33 billion, making it Europe's No. 2 automaker after Volkswagen. After being rebuffed by GM in 2015, rumors of talks with other automakers have swirled with varying intensity.

-With assistance from Daniele Lepido.

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