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Fiat Chrysler proposes merger with Renault | Fiat Chrysler proposes merger with Renault |
(32 minutes later) | |
Fiat Chrysler has made a "transformative" merger proposal for French carmaker Renault, the Italian firm said on Monday. | Fiat Chrysler has made a "transformative" merger proposal for French carmaker Renault, the Italian firm said on Monday. |
The combined business would be 50% owned by Fiat shareholders and 50% by Renault stockholders. | The combined business would be 50% owned by Fiat shareholders and 50% by Renault stockholders. |
The carmaker said the merger would create a global automotive leader, with 8.7 million vehicle sales. | The carmaker said the merger would create a global automotive leader, with 8.7 million vehicle sales. |
Carmakers have faced pressure to consolidate amid major industry shifts, including towards electric vehicles. | Carmakers have faced pressure to consolidate amid major industry shifts, including towards electric vehicles. |
Shares in both companies rose strongly following the announcement. | |
In a statement, Fiat Chrysler (FCA) said the planned merger would create a "world leader in the rapidly changing automotive industry with a strong position in transforming technologies, including electrification and autonomous driving". | In a statement, Fiat Chrysler (FCA) said the planned merger would create a "world leader in the rapidly changing automotive industry with a strong position in transforming technologies, including electrification and autonomous driving". |
Fiat said that if the firms' 2018 financial results were totted up, the combined company's annual revenues would be nearly €170bn (£149.6bn; $190.5bn), with operating profit of more than €10bn and net profit of more than €8bn. | Fiat said that if the firms' 2018 financial results were totted up, the combined company's annual revenues would be nearly €170bn (£149.6bn; $190.5bn), with operating profit of more than €10bn and net profit of more than €8bn. |
No plant closures would be caused as a result of the tie-up, the carmaker said. | No plant closures would be caused as a result of the tie-up, the carmaker said. |
Robotics sale | Robotics sale |
It will aim to save €5bn a year by sharing development costs on technology such as electric vehicles and self-driving cars. | It will aim to save €5bn a year by sharing development costs on technology such as electric vehicles and self-driving cars. |
It is thought some managerial positions may be lost, but the companies will be keen to show that production-line jobs are being preserved. | It is thought some managerial positions may be lost, but the companies will be keen to show that production-line jobs are being preserved. |
The new company will be based in the Netherlands and will be listed on the Milan, Paris and New York stock exchanges. | The new company will be based in the Netherlands and will be listed on the Milan, Paris and New York stock exchanges. |
To make the merger one of equals, the slightly-wealthier FCA will pay a special dividend of €2.5bn and sell its Comau robotics business. | To make the merger one of equals, the slightly-wealthier FCA will pay a special dividend of €2.5bn and sell its Comau robotics business. |
The proposal will be considered by the Renault board. Who will lead the new entity and what it might be called are not yet decided. | The proposal will be considered by the Renault board. Who will lead the new entity and what it might be called are not yet decided. |
New competitors | New competitors |
If the plan goes ahead, Nissan and the French government will own about 7.5% apiece of the new, merged company. | If the plan goes ahead, Nissan and the French government will own about 7.5% apiece of the new, merged company. |
The French government favours the merger but wants more details before giving its final approval, a spokeswoman said. | |
The Italian government may want to acquire a share of the new firm to balance France's stake, said a politician from the Northern League, the country's largest party, according to Reuters. | |
By sales, the new company will be number four in North America, number two in the region which covers Europe, the Middle East and Africa and the biggest in Latin America. | |
Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate. | Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate. |
Renault already has an alliance with Japan's Nissan, in which research costs and parts are shared. The companies own shares in each other, too. Renault owns 43.4% of Nissan's shares and Nissan owns 15% of Renault. | Renault already has an alliance with Japan's Nissan, in which research costs and parts are shared. The companies own shares in each other, too. Renault owns 43.4% of Nissan's shares and Nissan owns 15% of Renault. |
The former chief executive of both Nissan and Renault, Carlos Ghosn, is awaiting trial following his fourth arrest amid allegations of financial misconduct. | The former chief executive of both Nissan and Renault, Carlos Ghosn, is awaiting trial following his fourth arrest amid allegations of financial misconduct. |
The allegations have put a strain on the 20-year-old alliance, which also includes Japan's Mitsubishi Motors. | The allegations have put a strain on the 20-year-old alliance, which also includes Japan's Mitsubishi Motors. |
New entrants in the motoring sector such as Tesla, as well as cash-rich companies developing driverless technology such as Amazon and Google-owned Waymo, are putting pressure on older and often heavily indebted carmakers to keep up. | New entrants in the motoring sector such as Tesla, as well as cash-rich companies developing driverless technology such as Amazon and Google-owned Waymo, are putting pressure on older and often heavily indebted carmakers to keep up. |