Fiat Chrysler and PSA Peugeot announce merger to form 4th largest automaker in the world

Milan - Fiat Chrysler Automobiles (FCA) and grupo PSA, which owns Peugeot and Citroën, announced on Thursday, 31, that they have signed a merger agreement that will result in the fourth largest automaker in the world, with a market value of US$ 48.4 billion. The company will be behind Germany's Volkswagen, the alliance between Renault-Nissan-Mitsubishi and Japan's Toyota. Under the agreement, the shareholders of the two groups, FCA and PSA, will initially own 50% of the new company, according to a joint statement issued Thursday. The papers will be traded in New York, Milan and Paris in the Euronext trading session. The headquarters of the new company is expected to be in the Netherlands. The automakers said they expect to generate 3.7 billion euros ($4.11 billion) in annual synergies when fully integrated and that there are no plans to close any plant. Fca President John Elkann will be the president of the new automaker, while PSA chief executive Carlos Tavares, who is Portuguese, will serve as CEO with an initial five-year term. The group will have 11 board members, six of them from the PSA and five from the FCA. The merger is estimated to have an annual sales result of nearly 9 million vehicles, with total revenue of approximately $190 billion and recurring operating profit of more than $12 billion. The figures are based on 2018 results. So far, the project seems to have the support of France, which owns 12% of PSA's shares, as the European State reacted in favor to the idea, according to the country's economy minister, Bruno le Maire. The government has said it will remain "especially attentive" to keep France's industrial jobs maintained. The European Stock Exchanges received news of the merger with mixed signals. PARIS-listed PSA shares fell about 9% at 6:00 a.m. BRASILIA time, while Fiat-Chrysler shares soared by almost 10 percent in Milan. In France, representatives of the CGT and FO trade unions in the PSA group criticized the decision to install the new headquarters in the Netherlands. / Dow Jones Newswires/Reuters