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FCA Group proposes €32.6bn merger with Renault

FCA group

Fiat Chrysler Automobiles has proposed a €32.6 billion (£28.3bn) all-share merger with Renault to forge a new alliance that could save the Italian carmaker “in excess of €5 billion”.

Following the announcement of the proposal yesterday (May 27), shares in Renault, which began Monday with a market value of almost €15 billion, surged 13.8% in early Paris trading as shares in FCA started the day worth less than €18bn, climbed 10.6%.

If the merger goes ahead, the move could hel0p both brands towards efficiencies which would realise significant cost savings as they attempt to navigate the path towards a growth in electric vehicles and autonomous cars.

Following a meeting of Renault’s board yesterday morning, a statement issued by the French manufacturer said it would “study with interest the opportunity of such a business combination”, calling it a “friendly proposal”.

Renault will aim to make an initial decision as soon as possible, potentially by next week, according to the Financial Times.

The combination of Renault and the FCA Group would produce a vehicle manufacturing giant which currently produces 8.7 million vehicles a year that would immediately be installed as the world’s third largest carmaker behind the Volkswagen Group and Toyota.

The FCA Group estimates €1bn in annual synergies for Renault’s alliance partners Nissan and Mitsubishi from the combination.

It denied that plant closures would result frokm the proposed union but added that savings would be achieved rather “through more capital efficient investment in common global vehicle platforms, architectures, powertrains and technologies”.

John Elkann, chairman of FCA, said on Monday that Italy would “reap the benefits if this deal goes ahead”.

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