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Fiat Chrysler and Peugeot owner agree to merge into mega auto deal



Shareholders in each carmaker would own 50% of its total operations, the companies said in a joint statement Thursday. A binding agreement can be concluded within weeks, the statement states.

The combined company would be based in the Netherlands, which is the current headquarters of Fiat Chrysler. John Elkann, current chairman of Fiat Chrysler ( FCAU ) would perform the same role in the combined company, while PSA CEO Carlos Tavares would be CEO. [19659004] The company was to be among the largest car manufacturers in the world. Fiat Chrysler and PSA ( PUGOY ) sold 8.7 million vehicles last year, just before GM ( GM ) which sold 8.3 million, and not long after Volkswagen ( VLKAF ) and Toyota ( TM ) which each sold over 1
0 million.

The merger comes amid a global sales slowdown. At the same time, automakers are rushing to invest in the electrical and hybrid technologies needed to meet stringent new emission targets in China and Europe. Autonomous vehicles of the future also pose a threat to traditional industrial business models.

The huge amount of capital needed to meet these new challenges has forced some automakers to find partners and make others acquisition targets.

"We look at the combination of these two companies as reasonably given global competition, high capital intensity and disruption in the industry from electrified drives as well as autonomous technologies," Richard Hilgert, senior stock analyst at Morningstar, said in a research note on Wednesday.


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