FCA in merger talks with Renault

Fiat Chrysler Automobiles has confirmed it is in talks about a transformative merger with its French rival Renault. The new company would be 50% owned by FCA and 50% by Renault.

FCA stated the broad and complementary brand portfolio would provide full market coverage, from luxury to mainstream. Under the proposal, both carmakers would merge under a listed Dutch holding company.

FCA and Renault together built around 8.7 million vehicles last year. Including the production numbers of Renaults existing alliance (Nissan and Mitsubishi), the total would be closer to 15 million.

The talks between both carmakers went ahead without Renault’s partner of 20 years, Nissan and Mitsubishi Motors. After the arrest of Carlos Ghosn, the chairman of the Renault Nissan Mitsubishi Alliance, on charges of financial crimes, the rift between Renault and Nissan widened.

The markets have responded positively to the news of these merger talks. Renault shares have gone up 16.5% on Monday morning, FCA’s by 19%.

If successful, FCA shareholders would be entitled to an exceptional €2.5 billion dividend before the merger takes place.

 A final decision is not expected before the next few weeks.