Fiat Chrysler is looking for a potential tie-up its French rival, PSA. It is rumored that tie-up would create a $50 billion player. The deal is rumored to be announced on Thursday.
Chrysler would pay 5.5 billion euros to its shareholders. The combined bard of the new entity will have 12 members.
Five from Peugeot and five from Fiat Chrysler. John Elkann will be the Chairperson and Carlos Tavares will be the chief executive.
PSA and FCA denied making any comments on the rumors of their potential tie-up. This speculation has led to a rise in the shares of both the automobile companies. FCA’s share shot up by 10% and PSA’s share shot up by 6%.
The French government says that they are keeping a close eye on the matter as this tie-up is profitable but it might result in the fall out of jobs.
This alliance will stand the fourth rank on the number of vehicles in the market after Volkswagen, Toyota, and Renault-Nissan alliance.
Rome is concerned about the jobs of its citizens. As there are many employees who work in FCA’s underused plants. The tie-up might hit the jobs like it did in the Renault merger.
It is predicted that FCA may have to pay a fine of about 700 million euros if it does not manufacture hybrid and electronic cars. This alliance would give FCA access to Peugeot’s CMP modular platform.
It is also said that a tie-up with Renault would have been profitable than a tie-up with PSA for FCA.
Such tie-ups may create a job at one place and take away jobs from another. Alliances like this affects the price of the shares and the investors are always on a lookout to invest in the most profitable business to increase their returns.
Thus, if not as profitable as the tie-up with Renault but FCA-PSA tie-up will also bring in many opportunities.