Fiat Chrysler proposed on Monday to merge with France’s Renault to create the world’s third-biggest automaker, worth $40 billion, and combine forces in the race to make electric and autonomous vehicles.
The merged company would reshape the global industry: it would produce some 8.7 million vehicles a year, leapfrogging General Motors and trailing only Volkswagen and Toyota.
Shares of both companies jumped on the news of the offer, which would see each side’s shareholders split ownership in the new manufacturer.
Renault welcomed what it called a “friendly” offer. The company’s board met Monday at its headquarters outside Paris and said afterward that Renault will study the proposal “with interest.” In a statement, Renault said such a fusion could “improve Renault’s industrial footprint and be a generator of additional value for the Alliance” with Japan’s Nissan and Mitsubishi.
Fiat Chrysler’s offer comes at a key moment for Renault. The French manufacturer had wanted to merge fully with Nissan, but those plans were derailed by the arrest of boss Carlos Ghosn on financial misconduct charges in Japan.
The merger will be complicated because the combined company would involve operations in the U.S. and multiple European countries and Renault’s “eroding alliance” with two Japanese carmakers, said Karl Brauer, the executive publisher of Kelley Blue Book and Autotrader.
“It’s a powerful combination in theory,” he said, “but aiming for a single, aligned automotive entity, with everyone rowing in the same direction, might not be realistic.”