FCA submits merger proposal to Groupe Renault to create new global automotive group

A “transformative” all-share merger between FCA and Renault has been proposed to create a new third-ranked global auto manufacturer.

By: | Published: May 27, 2019 1:01 PM

Fiat Chrysler Automobiles N.V. has issued a non-binding proposal for a transformative 50/50 merger to the board of Groupe Renault to combine their respective businesses. This combination would create the third largest global OEM with 8.7 million vehicle sales. FCA said in a statement that the merger of the two automotive groups will allow for a strong presence across key regions, automotive markets and technologies, generating 5 billion euros ($5.6 billion) in annual savings.

FCA claims the broad and complementary brand portfolio would provide full market coverage, from luxury to mainstream. This would enable both companies to substantially improve capital efficiency and the speed of product development and gain a strong position in transforming technologies, including connectivity, electrification and autonomous driving.

FCA stated that the combined business could make them a world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis. The proposal highlights that the benefits are not predicated on plant closures, but would be achieved through more capital efficient investment in common global vehicle platforms, architectures, powertrains and technologies.

In the proposed merger between the two carmakers, shareholders in each company would receive an equivalent equity stake in the combined company. The combination would be carried out as a merger transaction under a Dutch parent company initially having 11 board members with the majority being independent and with equal representation of four members each for both FCA and Groupe Renault, as well as one nominee from Nissan.

FCA says that the combination of the the two groups would be shared, 50% by current FCA shareholders and 50% by current Groupe Renault shareholders. To mitigate the disparity in equity market values, FCA shareholders would also receive a dividend of €2.5 billion. The merger would also enable full market coverage with a presence in all key segments with brands like Maserati and Alfa Romeo at the top and mid range, while Dacia and Lada would sweep up the mass market in addition to the Fiat, Renault, Jeep and Ram brands as well as commercial vehicles.

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