Fiat Chrysler and Peugeot Agree on Terms to Forge New Auto Giant - The New York Times

Fiat Chrysler and PSA of France said Wednesday that they had agreed to the terms of a merger that would create the world’s fourth largest automaker.

The companies said they had signed a binding agreement formalizing the merger, announced in October.

The accord brings Fiat Chrysler and PSA, the maker of Peugeot and Citroën cars, much closer to creating a carmaker bigger than General Motors. But there will remain the task of integrating the companies, a process that could take many months.

PSA has shown no sign of second thoughts about the merger even after Fiat Chrysler became the target last month of a racketeering lawsuit by G.M. The complaint asserts that Fiat Chrysler bribed United Auto Workers officials in contract negotiations to get an advantage over G.M. Fiat has called the suit “meritless.”

The accord confirmed that Carlos Tavares, the head of PSA, would be the chief executive of the new company, and that John Elkann, the chairman of Fiat Chrysler, would be the chairman. Mr. Elkann is a scion of Italy’s powerful Agnelli family, which has long controlled Fiat.

By combining, Fiat Chrysler and PSA will surpass Volkswagen as the market leader in Europe. Between them they will have more than 400,000 employees and sales worldwide of 8.7 million vehicles.

The companies could share the cost of developing electric cars and autonomous-driving technology, which world automakers expect to be crucial in the coming decades. Electric cars need to meet stricter emissions regulations in Europe to avoid steep fines.

“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,” Mr. Tavares said in a statement.

But analysts regard the two carmakers, which have not said what the new entity will be called, as an imperfect match. They share some weaknesses, including a dependence on the declining European market and the lack of a strong presence in China, the world’s largest car market by far.

The merger has the blessing of the French government, which earlier this year derailed an attempt by Fiat Chrysler to merge with Renault. PSA and Fiat have said they will not close any factories, pleasing political leaders, but analysts are skeptical that they can keep that promise when sales are under pressure around the world.

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2019-12-18 07:00:00Z
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