Carmakers Fiat Chrysler and Peugeot confirmed their intention to merge Thursday, after speculation of the deal came earlier in the week.
The new company will be on track to have 8.7 million vehicle sales annually and 400,000 employees, making it the fourth-largest carmaker in the world.
“Discussions have opened a path to the creation of a new group with global scale and resources owned 50% by Groupe PSA shareholders and 50% by FCA shareholders,” the companies said in a joint statement.
The companies continued: “In a rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility, the combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency.”
Fiat Chrysler Chairman John Elkann will retain his title in the new company and Peugeot’s CEO Carlos Tavares will also keep his title.
“This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity,” Tavares said in the statement.
“I’m pleased with the work already done with Mike [Manley, CEO of Fiat Chrysler] and will be very happy to work with him to build a great company together.”
Before the finalization of the deal, Fiat Chrysler will pay its shareholders a special dividend of roughly $6.13 billion and its stakes in subsidiary Comau. Likewise, Peugeot will distribute it 46 percent share in automotive supplier Faurecia to its shareholders.
The merger is worth $50 billion and the new company’s stocks will be listed in Paris, Milan and New York.