The boards of PSA Group and Fiat Chrysler Automobiles (FCA) have each approved a binding agreement for a $50 billion merger, Reuters reports.

Sources with knowledge of the issue assert that the two manufacturers could formally announce the agreement before the end of week and offering further details during a conference call with reporters and analysts at a later time.

Word about the agreement being signed comes six weeks after plans were first announced that PSA and FCA were planning to join forces to create the world’s fourth-largest car manufacturer by volume.

It is understood that under the merger, China’s Dongfend Motor Group, which currently has a 12.2% equity stake in PSA, will have a reduced stake of around 4.5%, something that could help make regulatory approval for the merger easier. Elsewhere, it is reported that FCA’s robotics unit, Comau, will not be spun off as originally planned in October and instead remain within the combined group.

Under the merger, FCA will gain access to the more modern vehicle platforms of PSA, allowing it to better meet emissions regulations. PSA, on the other hand, will benefit greatly from FCA’s profitable U.S. business, including the Ram and Jeep brands.

There’s a possibility the merger could face regulatory scrutiny as governments in Rome, Paris, as well as various unions, may be wary of potential job losses. PSA’s Carlos Tavares will act as chief executive while FCA’s John Elkann will be chairman of the new entity.

The combined company will include brands such as Vauxhall, Opel, Fiat, Jeep, Ram, Dodge, Alfa Romeo, Chrysler, Maserati, Peugeot & DS with annual sales of around 8.7 million vehicles.

Categories: NewsPSA Group


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