On Wednesday (18/12), the world’s fourth-biggest carmaker was formed as Fiat Chrysler and Peugeot agreed on sealing a binding deal which caused a massive $50 billion all-share merger. The creation of this multi-billion-dollar company will subsequently cause several brands to unite, such as Fiat, Jeep, Dodge, Ram, and Maserati, with the likes of Peugeot, Citroen, and DS. The previous chief executive of PSA, Carlos Tavares, will be the one to lead the newly-formed group. The deal targets to cut costs by $4.1 billion dollars a year, without the need to close down factories. PSA and FCA experienced an uptick in stock value after news of the deal broke out, as recorded at 14.45 GMT (19/12), PSA shares were up 1.7% at 22.48 euros, while FCA's were up 0.2% at 13.63 euros (Euronext).
The motive behind this lucrative decision was due to heavy demand, particularly from the EU, on cutting exhaust emission in the fight against global warming. They inexplicitly demand the development of electric vehicles and self-driving systems from these automakers, although it is an indisputable fact that the development would require a fortune. The merge would consequently result in heavier competition between carmaker giants such as Volkswagen, Toyota, and the Renault-Nissan-Mitsubishi Alliance.
Thereby, the 50-50 merger will create a new Franco-Italian-American unity, domiciled in the Netherlands, but listed in Paris, Milan and New York. With the merge of these two powerhouses, it is hoped that sufficient investments would be obtained in order to start developing electric and autonomous vehicle technology. They also hope to smoothly transition from the days of internal combustion engines to keep up with current trends in automobiles, which often showcases the idea of a world brimming with clean, safe, and sustainable mobility.
Source:
Reuters
Financial Times
Guardian
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