Fiat Chrysler Automobiles N.V. (FCA) has delivered a non-binding letter to the Board of Groupe Renault proposing a combination of their respective businesses as a 50/50 merger. Renault’s Board of Directors will meet this morning to discuss this proposal.
The FCA proposal follows initial operational discussions between the two companies to identify products and geographies where they could collaborate, particularly as they develop and commercialize new technologies.
These discussions made it clear that a broader collaboration through a combination would substantially improve capital efficiency and the speed of product development.
The case for this combination is also strengthened by the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification and autonomous driving.
The proposed combination would create a global automaker, pre-eminent in terms of revenue, volumes, profitability and technology, benefitting the companies’ respective shareholders and stakeholders.
The combined business would sell approximately 8.7 million vehicles annually, would be 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 benefits of the proposed transaction are not predicated on plant closures, but would be achieved through more capital efficient investment in common global vehicle platforms, architectures, powertrains and technologies.
The parent company would be listed on the Borsa Italiana (Milan), Euronext (Paris) and the New York Stock Exchange. The benefits flowing from the combination of the two businesses would be shared, 50% by current FCA shareholders and 50% by current Groupe Renault shareholders.