Fiat Chrysler and PSA Peugeot have agreed terms on a £38 billion merger that will create the world’s fourth-largest car manufacturer.
Under the terms of the deal, no factories will close, but both firms have stated they expect to make £3 billion worth of cost cuts, though no details have been published as to where these are expected to be made.
The combined company will produce 8.7 million cars every year, generating £144 billion in sales, becoming the fourth largest car maker in the world after Renault-Nissan, Volkswagen and Toyota.
The two firms have announced that PSA Peugeot Chief Executive Carlo Tavares is set to lead the new group, while John Elkann of Fiat Chrysler will become Chairman of the new company.
The deal has raised some concerns from the 3,000 staff currently employed by Vauxhall (which is a subsidiary of PSA) in the UK, with a lack of clarity over where any cuts will be made.
Des Quinn, Unite National Officer, said when the deal was initially discussed: “Merger talks combined with Brexit uncertainty are deeply unsettling for Vauxhall’s UK workforce, which is one of the most efficient in Europe.”
A name has yet to be decided for the new company, while the deal is expected to finalise in Spring 2021.
Nigel Fry, General Practice Partner at Milsted Langdon, said: “This merger is a significant deal in the car manufacturing industry, and it will be interesting to see how it develops in the future. With the fourth-largest car maker in the world set to be created, more clarity is now required on the new company and its future plans.
“For advice on matters relating to mergers and acquisitions, contact our expert team at Milsted Langdon today.”