Peugeot and Fiat-Chrysler announce merger

Fiat Chrysler Automobiles (FCA) and Groupe PSA (Peugeot) have announced a merger. The combined entity will be the fourth largest OEM in terms of vehicle sales with a combined revenue of Euro 170 billion.

As per the deal, the shareholders of each company would own 50% of the equity of the new combined group. The merger will take place under a Dutch parent company with a balanced governance structure across the two shareholder groups, including a majority of independent board members. There will be 11 board members with 5 each nominated by FCA and Peugeot. John Elkann will be the chairman while Carlos Tavares would be appointed as a CEO for an initial term of 5 years.

The merger is also expected to result in cost savings to the tune of an estimated Euro 3.7 billion due to sharing of vehicle platforms, powertrains and technology as well as bulk purchasing rates due to the combined size. It is projected that 80% of these would be achieved after 4 years and a one time cost for the same is expected to the tune of Euro 2.8 billion.

The Dutch parent company would be listed on the Paris, Milan and New York Stock Exchanges and maintain presence in current head offices in France, Italy and USA. 

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