PSA Group and FCA merger confirmed
18 December 2019
Author: Sean Keywood
Carmaking giants PSA Group and FCA have confirmed they are to merge, having signed a binding combination agreement they say will create the world's fourth-largest car manufacturer by volume, and third-largest by revenue.
PSA is the owner of brands including Peugeot, Citroen, DS and Vauxhall, while FCA brands include Fiat, Alfa Romeo, Jeep and Maserati.
The agreement is for a 50/50 merger of the two businesses.
They say the merger will deliver around ?3.7 billion in estimated annual run-rate synergies, with no plant closures planned.
They says more than two-thirds of run rate volumes will be concentrated on two platforms, with approximately three million cars per year on each of the small platform and the compact/mid-size platform, delivering around 40% of the planned synergies.
Another 40% will come from purchasing - benefitting mainly from scale and best price alignment - with the remaining 20% coming from other areas, including marketing, IT, general and administrative expenses and logistics.
PSA CEO and chairman Carlos Tavares will become CEO of the newly-combined company, while FCA chairman John Elkann will become its chairman.
The merger is expected to take between 12 and 15 months to complete.
Tavares said: "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.
"I have every confidence that with their immense talent and their collaborative mindset, our teams will succeed in delivering maximized performance with vigour and enthusiasm."
FCA CEO Mike Manley said: "This is a union of two companies with incredible brands and a skilled and dedicated workforce.
"Both have faced the toughest of times and have emerged as agile, smart, formidable competitors.
"Our people share a common trait - they see challenges as opportunities to be embraced and the path to making us better at what we do."