Will The $ 50 Billion FCA and PSA Merger Succeed?

This is not the first time we hear about a merger between 2 carmakers to form a stronger alliance. Such a merger has its positive side, as it can boost research and development, and provide more advanced technologies, in addition to better sales figures in global markets.

But will the merger of Fiat Chrysler FCA and Peugeot owner PSA achieve its goals and result in annual cost savings of 3.7 billion euros (4 billion dollars (? And will it increase sales volumes in the Chinese and American markets?

Reuters news agency has now officially announced that both automotive groups have agreed to complete the deal in 12 to 15 months after they signed a binding agreement, which will combine Fiat Chrysler Automobile and the French PSA Group in a deal valued at $ 50 billion, equivalent to SAR 187.5 billion.

psa fca merger

PSA and Fiat Chrysler groups confirmed that the new company’s board of directors would have 11 members, five nominated by each company. And Carlos Tavares, President of the Italian American Company, will become the CEO of the combined entity for five years.

The two companies now face the challenge to win the support of the regulatory authorities and fulfill a commitment to reduce costs without closing factories after a binding agreement has been concluded to establish the fourth largest auto manufacturer in the world.

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The two tasks are likely to be daunting, as two of the industry’s oldest names are trying to integrate major European operations under the eyes of politicians and labor unions that have vowed to tackle any move that cuts jobs.

For their part, the finance ministers of France and Italy welcomed the agreement but said they would closely follow any impact on jobs in both countries, while Fiat Chrysler group said it would hold a meeting with labor unions next Friday to discuss the agreement.

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