According to various media, the PSA board has already agreed to a merger plan and the Fiat Chrysler board has yet to decide on it. The plan is for shareholders of the two parties to each acquire 50 percent of the shares of the merged entity. PSA CEO Carlos Tavares has to lead the combination. The French government is one of the largest shareholders in PSA.
A government spokesman said today to monitor developments surrounding the merger, also with a view to impacting jobs. But according to the spokesperson, a larger PSA is "ultimately the best way to protect jobs".
If the merger plans are successful, a company that makes 8,7 million cars annually will be worth 45 billion euros on the stock exchange, making it the fourth largest in the world. FCA was still in talks with Renault-Nissan about a merger until June this year. That project failed and Fiat Chrysler explained that politics in France opposed the merger. The French state is a 15 percent shareholder in Renault.
joining forces can lead to job losses
Fiat Chrysler includes the brands Fiat, Alfa Romeo, Maserati, Jeep, Dodge and RAM. According to the Wall Street Journal, the initiative for the merger talks lay with PSA. According to the FD, the joining of forces through the merger, especially due to the overlap in Europe, can lead to significant job losses. That will cause a lot of French political turmoil.
The US government is probably also on the ropes, because Peugeot with Dongfeng also has a large Chinese shareholder. The US and China have been engaged in a violent trade war for a year and a half. Chrysler, which merged with Fiat in 2014, is still among the Big Three from car city Detroit.
