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Fiat Chrysler proposes 50-50 merger with Renault

27 May 2019

Italian-American carmaker Fiat Chrysler Automobiles (FCA) has made a “non-binding” 50-50 merger proposal to France’s Renault. Renault’s Board of Directors said it will “study with interest” the opportunity of such a business combination.

The combined business would sell approximately 8.7 million vehicles annually, creating the third-largest automotive group, after Toyota and Volkswagen. Together with Renault partners, Nissan and Mitsubishi, the new business combination would become the world’s largest auto alliance, selling more than 15 million vehicles annually.

The FCA proposal follows initial discussions between the two companies to identify products and geographies where they could collaborate. The case for combination is further strengthened by the transformation of the auto industry in areas like connectivity, electrification and autonomous driving.

The merged company would be 50% owned by FCA shareholders and 50% by Renault shareholders. Before the transaction is closed, to mitigate the disparity in equity market values, FCA shareholders would also receive a dividend of €2.5 billion. The group would be listed in Paris, New York and Milan.

The deal would save the two carmakers €5 billion a year. FCA said no plant closures would result from the deal, and the savings would arise principally from the convergence of platforms, the consolidation of powertrain and electrification investment and the benefits of scale.

Source: FCA