On Wednesday, news came that PSA and FCA were seriously working towards a merger that would generate millions of synergy savings and create a group with a market capitalization of close to $ 50 billion. It is now known that the management of the French group PSA has already approved the agreement, and FCA officials are always expected to accept the terms of the agreement. But it seems that there are still many obstacles ahead.
According to Financial times, steps are being taken for the merger and approval by both administrations is crucial. But this does not mean that all obstacles are already overcome. One of the biggest problems is the French state, which is largely responsible for disapproving the merger between FCA and Renault, which demanded that no further redundancies or plant closures be held in France, exactly what both groups want with the merger. And if the French government controls 12.2% of Renault, it holds 13.7% of PSA, so the pressure is likely to be even higher this time.
Another major obstacle is the difference in cultures, which has already led to the merger between Chrysler and Daimler in 1998 ending years later in divorce. On the other hand, if everything works out perfectly, this association between the Italian-American and French groups will provide another excellent opportunity for the Portuguese Carlos Tavares to reinforce his image as one of the world's great car managers.
The group resulting from the PSA / FCA merger is expected to reach an annual production of 8.7 million vehicles, placing it in 4th place in the ranking behind the VW, Toyota and Renault-Nissan-Mitsubishi groups. As transpired, the administration of the new car giant should give six seats to PSA and five to FCA, with Tavares as CEO.