Italian carmaker, Fiat Chrysler on Monday confirmed that it has commenced has made a “transformative merger” talk with French peer Renault, in adeal which would create a world leader and help address some of the weaknesses in both Renault and Fiat.
Fiat said the combined business would be 50% owned by FCA shareholders and 50% owned by those of Renault.
According to Agency Reports, Pressure for consolidation among carmakers has grown with the challenges posed by electrification, tightening emissions regulations and expensive new technologies being developed for connected and autonomous vehicles.
Combining the businesses will bring together complementary strengths, the company said in a statement. The combination would create a brand portfolio that would provide full market coverage with a presence in all key segments from luxury/premium brands, such as Maserati and Alfa Romeo, to the strong access brands of Dacia and Lada, and would include the well-known Fiat, Renault, Jeep and Ram brands as well as commercial vehicles.The combined business would sell approximately 8.7 million vehicles annually, would be a world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis.
Taking into account the impact of the approximately €3-4 billion in cumulative implementation costs, it is estimated that the synergies would be net cash flow neutral in year one and positive from year two onward.
According to the company, this proposal offers the opportunity to create the 3rd global automotive company with
broad, complementary and strong brand and geographic presence and important strengths in transforming technologies.
The definitive agreements for the proposed combination are subject to negotiation and to final review and approval by the FCA and Groupe Renault Boards.
