The board of French carmaker PSA Group unanimously approved a merger with Fiat Chrysler Automobiles NV that will create the world’s fourth-biggest auto manufacturer, according to people familiar with the situation.
Fiat’s board is also meeting to consider the transaction, said the people, asking not to be identified discussing confidential matters. A spokesman for PSA declined to comment. The two companies sketched out their plan to combine six weeks ago.
The merger would create a regional powerhouse to rival Volkswagen AG and have a stock-market value of about $46 billion – surpassing Ford Motor Co. The tie-up would also bring together two auto-making dynasties, the billionaire Agnelli clan – led by Fiat Chairman John Elkann – and the Peugeots of France.
PSA’s Chinese shareholder, Dongfeng Motor Corp., will have a 4.5% stake in the combined entity, down from 12%, one of the people said.
The combination will give Peugeot-maker PSA a long-sought presence in North America and should help Fiat gain ground in developing low-emission technology. Yet the merger doesn’t fix all of the their shortcomings, Juergen Pieper, an analyst at B. Metzler Seel Sohn & Co. told Bloomberg Television on Tuesday.
The combined business will still lack “very good premium brands” as well as “a good position in China,” he said.
Shares of Fiat Chrysler advanced 0.6% in New York trading, giving the Italian American company a market value of $23.8 billion. PSA rose 0.9% earlier in Paris, valuing the French carmaker at about $22.3 billion.
(Updates with chart, detail on Dongfeng)
–With assistance from Gabrielle Coppola.
To contact the reporters on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net;Ania Nussbaum in Paris at anussbaum5@bloomberg.net;Daniele Lepido in Milan at dlepido1@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly, Tara Patel
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