Paris (AFP)

PSA and Fiat-Chrysler are on the way towards the creation of a new global automotive giant, a mega-merger between equals that must be done without factory closure, and under the benevolent but watchful eyes of the French and Italian states .

The two manufacturers announced Thursday to have unanimously agreed on the principle of a merger, with a strong emphasis on industrial affinities and the balance between the fiancés.

The final agreement could come "in the coming weeks," according to their joint statement.

With 8.7 million vehicles sold per year, the new entity, which would be based in the Netherlands, but would remain listed in Paris, Milan and New York, would become the world's n ° 4. It would be held at "50/50", the shareholders of both groups sharing exactly the capital after various financial transactions.

FCA would distribute in particular to its shareholders a special dividend of 5.5 billion euros, while PSA would give his own 46% of shares in the equipment manufacturer Faurecia.

The same concern for parity on the board of directors: five members would be appointed by Fiat-Chrysler, five by PSA, the eleventh being Carlos Tavares, current boss of the French manufacturer who would become general manager of this new group.

John Elkann, president of Fiat-Chrysler, would take the lead.

For now, the French State, a 12% shareholder of PSA, welcomes the idea with kindness. During other engagements as spectacular as quickly aborted in the spring, this time between Fiat Chrysler and Renault Nissan, Paris - also shareholder - had on the contrary braked.

"I prefer to see Peugeot continue to develop, achieve a spectacular development, become today the fourth largest car manufacturer worldwide with Fiat rather than being outside of this movement of automobile consolidation that is absolutely essential," said the Minister of Economy, Bruno Le Maire.

"If there are economies of scale (to be achieved), all the better, both groups will benefit, but the important thing is to guarantee the level of employment and investment here in Italy," said the head of the Italian government Giuseppe Conte at the Italian Agency AGI.

Both groups ensured that "no plant closures" were planned.

- Netherlands -

"The same promise was made during the acquisition of Opel Vauxhall in 2017 and it was held," said AFP Patrick Michel, secretary Force Ouvriere - the first union at the manufacturer - the world group committee at PSA.

The CGT, the third union, is less enthusiastic: "We are worried about employment in general, of course, there will be duplicates, and a competition between factories and employees," fears Jean-Pierre Mercier, central union representative.

Unions, on the other hand, are unanimous in criticizing the choice of the Netherlands: a "tax scheme" according to the CGT, a "facility" for FO.

On the stock market, the shares of the two manufacturers knew radically different fortunes. At 3:30 pm (14:30 GMT) on the Milan Stock Exchange, Fiat Chrysler jumped 8.8%, while Paris PSA was down 11.9%.

"The market capitalization of Peugeot is greater than that of Fiat Chrysler.With a merger to 50/50, it is actually Peugeot that technically bought Fiat (...) .The market therefore takes into account this situation," observed from AFP Daniel Larrouturou, equity manager at Dôm Finance.

- A well matched couple? -

PSA and FCA have estimated at € 3.7 billion the synergies, that is the savings of resources generated by their merger, for a company whose consolidated turnover is estimated at € 170 billion .

The couple wants to match well. "PSA and Fiat-Chrysler know each other very well and their relationships are excellent, which has allowed us to move quickly to this stage." Studying this partnership is fully consistent with our long-standing need to strengthen our connected industry ", explained FCA boss Mike Manley.

According to experts, PSA brings its expertise in terms of vehicle electrification, at a time when manufacturers have to adapt to harsher pollution standards. While FCA offers its gleaming Alfa Romeo or Maserati.

The merger would also allow the French to return to the US market thanks to the Dodge and Jeep of his ally, while FCA consolidate its positions in Europe, where it is losing momentum. The Italian-American manufacturer announced Thursday a net loss of 179 million euros in the third quarter, and a decline in sales.

© 2019 AFP