Fiat Chrysler Automobiles and Peugeot owner PSA signed a $50 billion merger deal Wednesday that will create the world’s fourth-largest automaker.
The 50-50 merger will bring a diverse range of European and American car brands — including Chrysler, Jeep, Maserati, Citroën and Vauxhall — under one roof as both companies work to develop more environmentally friendly vehicles.
“Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services,” said PSA CEO Carlos Tavares, who will serve as the combined company’s chief executive.
Fiat Chrysler and PSA first announced plans for an all-stock merger in October. The binding agreement signed Wednesday comes as Fiat Chrysler — which has been embroiled in a union corruption scandal in the US — faces a racketeering lawsuit from American rival General Motors.
The merger — expected to be complete in 12 to 15 months — will create a new auto giant that will sell 8.7 million vehicles a year and rake in more than 11 billion euros, or $12.2 billion, in recurring operating profits, according to the companies.
The automakers pledged to find 3.7 billion euros, or about $4.1 billion, in annual savings without shutting down any plants — a tall order for a firm that will employ about 400,000 people.
The companies estimate that purchasing efficiencies will account for 40 percent of the savings, while “technology, product and platform-related savings” will make up another 40 percent. The rest will come from other areas such as marketing and logistics, according to a news release.
Fiat Chrysler said it planned to meet with unions about the merger on Friday. United Auto Workers members in the US approved a new four-year labor contract last week with the company, whose American arm is headquartered in Auburn Hills, Michigan.
Fiat Chrysler’s New York-listed stock was down 1.1 percent at $15.17 in premarket trading as of 7:27 a.m. Wednesday, while Paris-listed shares of PSA were recently up 1 percent at 22.33 euros.
Fiat Chrysler said it was “astonished” last month by GM’s federal lawsuit accusing the company of corrupting labor negotiations with a long-running union bribery scheme. The complaint named three former Fiat Chrysler officials whom federal prosecutors charged as part of a criminal probe of the scheme.
Fiat Chrysler said it considered the “meritless” lawsuit an attempt to “disrupt” its merger with PSA.
With Post wires
