Fiat Chrysler merged with Renault, the government is positive

Car maker Fiat Chrysler Automobiles (FCA) wants to merge with France’s Renault. The Italian-American carmaker has sent a proposal in this regard to Renault’s board. The company has responded positively.

The French government, which has a 15 percent stake in Renault, has also welcomed the merger plans, but a spokesman said it wanted to look at workers’ rights. Italy’s Deputy Prime Minister Salvini said he thought it would be good news if Fiat grew from this plan. Investors also like the deal. In European stock markets, shares of those companies rose by more than 10 percent.

The union should create a company that will produce 8.7 million vehicles per year. The combined company will be the third largest automaker after Volkswagen and Toyota. According to the plan, the merger will bring annual savings of 5 billion euros.

In a statement, Fiat Chrysler said it should be an equal merger, with 50 percent of the shares held by FCA shareholders and 50 percent by Renault shareholders. However, Fiat shareholders would receive a one-time “super dividend” worth 2.5 billion euros.

The merged company will have its head office in the Netherlands.

Renault now has alliances with Japanese automakers Nissan and Mitsubishi. It is unclear what will happen to the alliance if Renault and Fiat Chrysler merge.

The partnership between Renault and the Japanese has been under pressure since former CEO Ghosn was arrested on suspicion of financial fraud. In March, the three car manufacturers declared their love for each other again, as well as creating a new model.