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Fiat Chrysler, PSA Peugeot Boards Approve Merger

Associated Press

   MILAN, ITALY - The boards of Fiat Chrysler and PSA Peugeot announced
   Thursday fast-moving plans to merge the two companies creating the
   world's fourth-largest automaker with enough scale to confront "the new
   era in mobility."

   The merger would bring together Italian-American Fiat Chrysler, with
   its strong footprint in North America where it makes at least
   two-thirds of its profits, and France's PSA Peugeot, the No. 2
   automaker in Europe. Both lag in China, despite the participation of
   the Chinese shareholder Dongfeng, in PSA Peugeot, and are catching up
   in the transition to electrified powertrains.

   The 50-50 merger is expected to create synergies of 3.7 billion euros
   ($4 billion), a figure that the automakers said they expect to achieve
   without any factory closures - a concern of unions in both France and
   Italy where the carmakers have more model overlap.

   The new company would have combined revenues of 170 billion euros, an
   operating profit of over 11 billion euros and produce 8.7 million cars
   a year - behind Toyota, Volkswagen and the Renault-Nissan alliance. The
   combined market capitalization would be around $50 billion.

   Once a merger is finalized, PSA Peugeot CEO Carlos Tavares will be
   chief executive of the new company with Fiat Chrysler Chairman John
   Elkann taking the role of chairman. Fiat Chrysler CEO Mike Manley would
   have a senior executive role and work closely with Tavares.

   "This convergence brings significant value to all the stakeholders and
   opens a bright future for the combined entity," Tavares said in a
   statement.

   Manley called it "an industry-changing combination," and noted the long
   history of cooperation with the Groupe PSA in the industrial vehicle
   sector in Europe.

   The 11-member board will be made up of five members from each company
   plus Tavares, who is locked in as CEO for five years.

   The automakers said that the new company would be able to meet the
   challenges of powertrain electrification, connectivity and autonomous
   driving "with speed and capital efficiency."

   The combined company will be able to share in the cost of developing
   those technologies with their "strong global R&D footprint," they said,
   adding that will also save on investments in vehicle platforms and save
   money with greater purchasing power.

   Both companies "share the conviction that there is compelling logic for
   a bold and decisive move that would create an industry leader with the
   scale, capabilities and resources to capture successfully the
   opportunities, and manage effectively the challenges in the new era in
   mobility," the statement said.

   The merger decision comes about five months after a similar deal with
   French automaker Renault fell apart, mostly over French government
   concern about the role of Renault's Japanese alliance partner Nissan.
   There were no signs of resistance to this deal, beyond concerns for
   jobs.

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