Peugeot and Fiat Chrysler in Talks to Merge

Fiat Chrysler in talks to Merge

Fiat Chrysler and Peugeot owner PSA are in talks to combine in a deal that could create a $50 billion (£38.88 billion) automaker, the Wall Street Journal reported on Tuesday, citing sources.

The deal could be in the form of an all-stock deal, the report said.

Fiat Chrysler shares rose sharply after the report and were up over 7% in late afternoon trading. It was speculated by the investors for several years that Fiat Chrysler was looking for a merger partner; the rhetoric of the company late chief executive encouraged this idea of merging, Sergio Marchionne. In 2015, Marchionne outlined the case for consolidation of the auto industry and tried unsuccessfully to interest General Motors Co in a deal.

Earlier this year, Peugeot and Fiat Chrysler were in talks for merging their company, before Fiat Chrysler was supposed to collaborate with French automaker Renault SA after proposed a $35 billion merger.

Fiat Chrysler Chairman John Elkann broke off talks with Renault in June after French government officials intervened, and pushed for Renault to first resolve tensions with its Japanese alliance partner, Nissan Motor Co.

After the collapse of the merger plan with the Renault, CEO of Fiat Chrysler, Mike Manley widened the door for talks with would-be partners, however, he said that “the Italian-American automaker, could go it alone despite mounting costs to develop electric vehicles and comply with tougher emissions rules in Europe, the United States and China”.

Peugeot CEO Carlos Tavares dismissed a combination with Fiat Chrysler during a discussion with reporters at the Frankfurt auto show last month.

“We Don’t need it,” Tavares said when asked whether he was still interested in a deal with Fiat Chrysler. Fiat Chrysler has a vehicle partnership with Peugeot commercially.

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