fiat chrysler and peugeot sign the deal to pursue mega auto merger

Fiat Chrysler And Peugeot Sign The Deal To Pursue Mega Auto Merger

Business

Peugeot owed by the PSA Group and Fiat Chrysler (FCA) have come together to create the world’s fourth-largest carmaker. It is touted to be the complete revamping of the automotive sector. The new trans-Atlantic automaking giant will have roughly 410,000 employees. The combined revenues of $190 billion will be spent on the new entity. Investors of both the companies will own 50 percent of the combined operation. FCA’s John Elkann will be the chairperson and Carlos Tavares from Peugeot will be the CEO of the new venture. The share of the new company will be listed in New York, Paris, and Milan. The proposed merger is expected to build an industry mammoth with 8.7 million vehicle sales.

The new automobile company will rank among the largest automakers across the globe. It will be based in the Netherlands. The Netherlands is the current headquarter of Fiat Chrysler. The merger news of two carmakers creating a new entity worth $50 billion has increased the share prices of both the companies. Fiat Chrysler witnessed its stock surging as much as 13 percent collectively. As the market opened in Europe on Thursday, Peugeot’s shares fell to 8.8 percent. This association came after Fiat put an end to its merger talks with Renault. Fiat and Peugeot are expected to finalize a memorandum of understanding within weeks. FCA has also promised to give away a special dividend of 5.5 billion Euros to its shareholders. The company will also give shareholdings to its investors in subsidiary firm Comau. Peugeot is supposed to give 46 percent of its stake to shareholders in automotive supplier Faurecia.

Considering the challenges of mobility in the future, both the car giants have agreed to form a joint venture. This merger is an outcome of a global slowdown. The carmakers who are pushing through to invest in electric and hybrid technologies require to meet strict emission targets in China and Europe. The companies need a huge amount of revenue to fight these challenges. This has led companies to form mergers and turn others into acquisition goals.  As per the vehicle sales, Volkswagen group, Renault-Nissan and Toyota have secured the top three places in the list of world’s leading automakers in 2018.

Arya Green

Arya, our senior correspondent for business updates, have worked in the industry for more than a decade as an executive and in other roles. Right now, she focuses on covering business updates that matter to not just the commons but also professionals like investors. She is a great lover of books and is planning on writing the ultimate guide on business analytics.

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