Fiat Chrysler (FCA) and the PSA Group have signed a definitive merger agreement.
The two companies say they will, in time, generate two-thirds of its sales from just two platforms: one for compact cars, and one for compact and mid-size models. Each platform is expected to generate around three million sales per year globally.
Reports indicate these will be PSA Group's CMP architecture, used in the Opel Corsa and Peugeot 208, and the larger EMP platform, which is employed by cars from the Peugeot 3008 all the way up to the Peugeot 508.
Unlike FCA's comparable platforms, both of these PSA architectures are only a few years old, contain more lightweight materials, and have been designed to accommodate low-carbon propulsion systems, such as plug-in hybrid and fully electric powertrains.
Above: In the future Jeep models will likely share a lot with the Peugeot 208.
Ram's money-spinning body-on-frame pickup truck architecture will likely live on, but it's unclear how the French-Italian-American automaker will handle the various rear-wheel drive platforms used by Dodge, Jeep, Alfa Romeo and Maserati.
There will be thirteen marques brought together by this transaction (Fiat, Alfa Romeo, Maserati, Lancia, Chrysler, Dodge, Jeep, Ram, Peugeot, Citroen, DS, Opel and Vauxhall), and reports have indicated they will live on, at least in the short term.
The combined automaker will find itself in a confident position on three continents, with FCA strong in North America and Latin America, while the PSA Group is the second largest car maker in Europe.
As previously announced, Carlos Tavares, PSA CEO, will become the new chief executive officer of the merged automaker for at least five years, while John Elkann, FCA's chairman, will continue in that role with the combined entity.
Equity between the two automaker's shareholders will be split 50/50. There will be eleven members on its board of directors, with FCA and PSA nominating five each.
As Tavares is the board's 11th member, and not a PSA nominee, he will have the power to break any deadlocks. There will be two board members representing the company's employees.
The yet-to-be-named merged automaker will be legally headquartered in the Netherlands, and will retain share listings in Milan (Borsa Italiana), Paris (Euronext), and New York.
The companies expect the merger to take between 12 and 15 months to complete, as the terms of the deal still need to be approved by shareholders, as well as regulators throughout the world.
Given stringent enforcement of anti-trust rules in the EU, the two automakers will need to continue as competitors with a "business as usual" mentality.
Above: What does the future hold for DS now Alfa Romeo and Maserati are joining the family?
Major shareholders in both firms — including the Agnelli family (key stakeholders in Fiat Chrysler), the Peugeot family, Chinese automaker Dongfeng, and Bpifrance (the country's investment arm) — have agreed to vote in favour of the deal.
They have also agreed on the size of their shareholdings in the new firm, and will keep to those levels for between three and seven years.
Based on 2018 numbers, the merged automaker will be the world's fourth largest — behind the Volkswagen Group, Toyota and the Renault Nissan Mitsubishi Alliance — with annual sales of around 8.7 million vehicles.
As a combined entity, the new company will be worth around €41.4 billion ($67 billion), with an aggregate operating profit of €11 billion ($17.8 billion).
The new firm will be heavily reliant on two regions for its profit, as Europe comprises 46 per cent of the group's revenue, while North America is responsible for 43 per cent.
Once the merger is done and dusted, the companies say they will save €3.7 billion ($6 billion) annually. Roughly 80 per cent of this will come through savings related to technology, product and platform sharing, as well as improved scale, which reduces purchasing costs.
The remainder of the "synergies" will come from combining their marketing, IT, general administration and logistics departments.
Both automakers have stressed their "synergy estimates are not based on any plant closures resulting from the transaction".