FCA, PSA Confirm Merger Talks; Deal Near?

Fiat Chrysler Automobiles NV and PSA Group confirm they are discussing a possible merger. Bloomberg News says a deal could be announced tomorrow.

Both company boards are meeting independently today to consider the move, which would create a global carmaker valued at $47 billion. Shares in both carmakers jumped on the prospects of a possible merger.

The French government, which holds a 13.7% stake in PSA, is following developments closely. Reuters says the state wants to ensure that any merged entity will preserve existing links between PSA and state bank BPIFrance.

France also would want the merged companies to support a European consortium being set up to establish local production capacity to make batteries for electric cars, according to Reuters.

Analysts consider an FCA-PSA merger more appealing than the FCA-Renault deal that collapsed in June, partly because of Renault’s complex and strained alliance with Nissan Motor Co.

Observers also note that considerable savings would be possible as the two companies eliminate overlapping business operations in China, Europe and Latin America.