Fiat Chrysler Automobiles has this weekend delivered a non-binding letter to the Board of Groupe Renault proposing a combination of their respective businesses as a 50/50 merger.
The proposed ‘transformative’ merger would see the combined group have almost 9 million car sales a year.
Geographically, based on FCA and Groupe Renault’s 2018 global sales, the combined company would be number four in North America, number two in EMEA and number one in Latin America and would have the increased resources necessary to grow its footprint in the APAC region.
Under the terms of the proposal, shareholders in each company would receive an equivalent equity stake in the combined company. The combination would be carried out as a merger transaction under a Dutch parent company.
A statement from Renault’s parent company Groupe PSA read: “This proposal offers the opportunity to create the number three global automotive company with broad, complementary and strong brand and geographic presence and important strengths in transforming technologies. It also confirms and enhances the value of the existing Alliance and its potential to become even stronger in the future. While there is no certainty that this proposal will result in a transaction, the Board of FCA has strongly supported and approved the proposal which will now be reviewed by the Groupe Renault Board of Directors.”
The definitive agreements for the proposed combination are subject to negotiation and to final review and approval by the FCA and Groupe Renault Boards. Completion of the proposed combination would also be subject to customary closing conditions, including approval by each company’s shareholders, as applicable, and the satisfaction of antitrust and other regulatory requirements