Fiat Chrysler and Groupe PSA of France announced Wednesday they had agreed to merge, becoming what would be the world’s fourth-largest automaker.
The companies said in a statement they had signed a binding agreement to formalize the merger, which had been announced in October. The combined company is expected to have annual unit sales of 8.7 million vehicles, with revenues of nearly $189 billion and recurring operating profit of over $12 billion.
“With its combined financial strength and skills, the merged entity will be particularly well placed to provide innovative, clean and sustainable mobility solutions, both in a rapidly urbanizing environment and in rural areas around the world,” the companies said.
“The gains in efficiency derived from larger volumes, as well as the benefits of uniting the two companies’ strengths and core competencies, will ensure the combined business can offer all its customers best-in-class products, technologies and services and respond with increased agility to the shift taking place in this highly demanding sector.”
The merger between Fiat Chrysler and PSA, which makes Peugeot and Citroën cars, could rival the size of General Motors. However, the integration could still take up to 15 months to complete.
Under the merger, Carlos Tavares, the head of PSA, would be the chief executive of the new company, while John Elkann, the chairman of Fiat Chrysler, would be the new chairman.
“Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services. I have every confidence that with their immense talent and their collaborative mindset, our teams will succeed in delivering maximized performance with vigor and enthusiasm,” said Tavares.
Beyond Fiat, Peugeot and Citroën, the brands covered under the merger will include Alfa Romeo, Maserati, Dodge, Jeep and Ram trucks.
The merger has the blessing of the French government, which owns a 12 percent stake in PSA.
The agreement “is very good news for France, for Europe and for our automotive industry,” Bruno Le Maire, the French minister of the economy and finance, told The New York Times. “It represents an important step in the creation of a European champion.”