The two companies said in a statement that they would seek a full merger. FCA and PSA shareholders must each own 50 percent of the shares in the newly created company. It will trade on the Paris, Milan and New York stock exchanges.
Fiat Chrysler will also pay extraordinary dividends to shareholders. The company will spend a total of 5.5 billion euros for it. It must also give up shares in the technology division for the production of the Comau robot. PSA will transfer a total of 46 percent of shares in Faurencia, an automotive component manufacturer, to its shareholders.
However, analyst Philippe Houchois of Jefferies, according to CTK, pointed out that after calculating the planned market value and dividend payments, the merger meant that the PSA would pay 32 percent more. FCA shares rose on Thursday, reaching their highest level last year. PSA shares fell.
By joining the two companies, the two companies must save around € 3.7 billion a year. According to preliminary estimates, annual sales are expected to reach EUR 170 billion and car sales are estimated to be around 8.7 million units per year.
Help each other
The deal came at a time when global carmakers met with a decline in customer interest. Developing companies want to invest in the development of electric and autonomous vehicles. Technology for their development must also be shared.
The company's registered office must be in the Netherlands and John Elkann from Fiat Chrysler will become the Chair of the Board. From PSA, Carlos Tavares will be the main person, who will function as the group's general manager in the joint company.
Under the supervision of
The new company will initially be overseen by antitrust authorities. French Finance Minister Bruno Le Marie welcomed the merger but, for example, car factories already in Rome and Paris were worried about losing their jobs. This information was previously hidden by Italian Minister of Industry Stefano Patuanelli, who said that he was not afraid of losing his job at Italian companies.