Fiat Chrysler and Renault discuss possibility of a merger

Fiat Chrysler Automobiles (FCA) has officially proposed a merger with France’s Groupe Renault, in a move that – if successful – would create the world’s third-biggest automaker.

According to a May 27 statement issued by Renault, FCA is seeking “a potential 50/50 merger transaction” between the two companies.

A follow-up statement, also released by Renault on May 27, confirms the receipt of FCA’s “friendly proposal,” and says the company’s board of directors “decided to study with interest the opportunity of such a business combination, comforting Groupe Renault’s manufacturing footprint and creating additional value for the Alliance.”

A deal would save 5 billion euros for the merged companies each year by sharing research, purchasing costs and other activities, FCA said in a statement. It said the deal would involve no plant closures, but made no mention of any potential job cuts.

The companies are largely complementary: FCA is stronger in the North American and SUV markets, while Renault is stronger in Europe and on electric vehicle developments. Together, they would be worth almost 40 billion euros.

If successful, the new merged company would rank third in the global automotive industry, behind only Japan’s Toyota and Germany’s Volkswagen.

According to news reports, FCA chief executive Mike Manley has told employees that a merger with Renault could take more than a year to finalize.