Fiat Chrysler and Peugeot S.A. Agree to $48 Billion Merger

The merger will result in the world’s fourth-largest automaker.

It’s official: after rumblings of a merger, Fiat Chrysler and Peugeot owner PSA are making it happen.

The deal calls for an equal split, with 50 percent ownership of the new group for each existing company. In 2018 FCA and PSA combined produced 8.7 million vehicles globally, enough to put them in a solid fourth place, behind Volkswagen AG, Toyota, and Renault-Nissan-Mitsubishi.

This level of scale is necessary, say the automakers, to address the industry’s moves into electric vehicles as well as autonomous tech. FCA expects savings of roughly $4 billion per year thanks to the merger, plus zero plant closures.

FCA—which includes Jeep, Chrysler, Dodge, Ram, Alfa Romeo and Fiat—has a strong presence in the North American market. It’s an arena Peugeot has vowed to re-enter in the next few years, which makes the partnership all the more important. Meanwhile the lion-badged brand is second in sales in Europe, selling alongside partners Citroën and Vauxhall/Opel.

PSA is no stranger to mergers, having just picked up Vauxhall/Opel from General Motors in 2017.

The new mega-company will be headquartered in the Netherlands, where Fiat Chrysler has its current HQ. John Elkann, current FCA chairman, will take the same position at the new company. The board would consist of 11 members: five from each existing company, plus current PSA CEO Carlos Tavares. Tavares will also keep his title post-merger, as CEO for at least five years.

Both companies expect to finalize the deal in the coming weeks.

Tavares had this to say on the merger: “This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity. I’m pleased with the work already done with Mike and will be very happy to work with him to build a great company together.”