France welcomes PSA-FCA combination, but remains vigilant on domestic industrial footprint

Source: Xinhua| 2019-10-31 20:42:23|Editor: xuxin
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PARIS, Oct. 31 (Xinhua) -- French Minister of Economy and Finance Bruno Le Maire on Thursday "favorably greets the entry into negotiations" of French carmaker PSA Group and Italian-American auto giant Fiat-Chrysler Automobiles (FCA) to create a combined company.

"This operation would give both groups the necessary size to carry out the investments needed to face the challenges of energy transition, electrification and shared, autonomous and connected driving," Le Maire said in a statement.

"(It) responds to the need for the automotive sector to face the challenges of the mobility of the future," Le Maire added.

The planned 50-50 tie-up of the two groups, which include the Fiat, Dodge, Ram, Chrysler, Alfa Romeo, Maserati, Peugeot, DS, Opel and Vauxhall brands, would create the world's fourth-largest automaker.

The new group will be "present all over the world with a strong industrial footprint in Europe and America," and will produce a complete range of automobiles from utility vehicles to premium brands, Le Maire noted.

However, the French minister warned that the government will remain particularly vigilant on whether the new group preserves industrial footprint in France, where decision making will be located and if it will help create the infrastructure to build electric batteries in Europe.

Early Thursday, the Supervisory Board of Peugeot S.A. and the Board of Directors of Fiat-Chrysler Automobiles "have each unanimously agreed to work towards a full combination of their respective businesses by way of a 50/50 merger," the two companies said in a joint statement.

The management teams will seek to finalize the deal in the coming weeks to create a group that will sell 8.7 million vehicles annually. It is expected to have annual run-rate synergies of approximately 3.7 billion euros (4.1 billion U.S. dollars), even without plant closures resulting from the transaction.

Around 80 percent of potential synergies could be achieved within four years, at a cost of 2.8 billion euros, they added.

PSA and Fiat-Chrysler announced that the new company would have combined revenues of nearly 170 billion euros per year and the operating profits would be 11 billion euros.

Domiciled in the Netherlands, it will be listed in the stock exchange of Paris, Milan and New York. PSA's Carlos Tavares would serve as CEO and FCA's John Elkann as chairman.

The planned merger between the two groups comes just months after a high-profile marriage between Fiat-Chrysler and France's Renault collapsed at the last minute.