Fiat Chrysler and Peugeot’s owner PSA said on Thursday they would join forces through a 50-50 share swap to create the world’s fourth-largest carmaker.
The boards of the two groups are finalising discussions and will reach a binding memorandum of understanding in the coming weeks, the two companies said in a joint statement.
FCA’s Chairman John Elkann will chair the combined group, while Peugeot’s Chief Executive Carlos Tavares will be the new CEO.
The deal comes at a time when car makers are grappling with a global downturn in demand and looking to develop technologically advanced, cleaner car models to meet ever more stringent anti-pollution rules.
The merger, once completed, is expected to generate 3.7 billion euros ($4.1 billion) in annual synergies, without any plant closures, they said.