Fiat Chrysler and Renault pursue $35 b merger

Wednesday, 29 May 2019 00:16 - - {{hitsCtrl.values.hits}}

MILAN/PARIS (Reuters): Fiat Chrysler pitched a finely balanced merger of equals to Renault on Monday to confront the costs of far-reaching technological and regulatory changes by creating the world’s third-biggest automaker.

If it goes ahead, the $35 billion-plus tie-up would alter the landscape for rivals, including General Motors and Peugeot maker PSA Group, which recently held inconclusive talks with Fiat Chrysler (FCA), and could spur more deals.

French group Renault said it was studying the proposal from Italian-American FCA with interest, and considered it friendly. Shares in both companies jumped more than 10% as investors welcomed the potential creation of a company that would produce more than 8.7 million vehicles a year and aim for EUR 5 billion ($5.6 billion) in annual savings. It would rank third in the global auto industry behind Japan’s Toyota and Germany’s Volkswagen.

But analysts also warned of big complications, including Renault’s existing alliance with Nissan, the French state’s role as Renault’s largest shareholder and potential opposition from politicians and workers to any cutbacks.