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PARIS (AP) – Fiat Chrysler on Monday proposed to merge with French Renault to create the world's third largest automaker and save the billions of dollars needed to invest in the race to create new electric and autonomous vehicles.
The merged company would restructure the global sector: it would produce about 8.7 million vehicles a year, far exceeding General Motors and ahead of Volkswagen and Toyota.
The shares of both companies jumped by more than 10% at the announcement of the offer, which would have the effect of dividing the shareholders of each party into the new manufacturer.
Renault welcomed the idea. The board of directors of the company met Monday in Boulogne-Billancourt, its head office, to discuss the proposal. He then indicated that Renault would study it "with interest". In a statement, Renault said that such a merger could "enhance Renault's industrial footprint and generate additional value for the Alliance" with Japanese automakers Nissan and Mitsubishi.
Fiat Chrysler's bid comes at a key moment for Renault. The French automaker apparently wanted to merge with Nissan, but these plans were disappointed by the arrest of boss Carlos Ghosn for financial misconduct in Japan.
The Renault-Nissan-Mitsubishi alliance, the world's largest manufacturer of pbadenger cars, is raising more and more questions. Although Fiat Chrysler believes that the merger with Renault will facilitate the alliance, it is not clear how Japanese companies could react in the long run if they were linked to a much larger partner.
A merger would save both companies 5 billion euros ($ 5.6 billion) each year through sharing of research, purchase costs and other activities. Fiat Chrysler said in a statement. He said the agreement would not result in plant closures, but did not address potential job cuts.
The companies are somewhat complementary: Fiat Chrysler is stronger in the US and SUV markets, while Renault is stronger in Europe and in electric vehicle developments. Together, they would represent nearly 40 billion euros.
The French government, which owns 15% of Renault's capital, is "in favor" of the idea of a merger with Fiat Chrysler but wants to study its conditions in more depth, particularly in terms of "industrial development of Renault "and working conditions of employees, government spokesman Sibeth Ndiaye said Monday.
Such a merger would show "our ability to respond to the challenges of European and French sovereignty in a globalized context," she said. "We need giants to be built in Europe."
The influential French CGT union has warned of job cuts as part of a merger and said it wanted the French government to retain a blocking stake in any new venture.
Italian officials seemed open to agreement. Matteo Salvini, party leader of the right-wing populist League and deputy prime minister, said that "if Fiat is developing, this is good news for Italy and the Italians", although it has warned that an agreement should protect "every job".
Investors welcomed the move, increasing Fiat Chrysler shares by 10% and Renault's European trading by 14%.
Nissan Motor Co. General Manager, Hiroto Saikawa, did not comment directly on the idea, but said: "I am always willing to exchange constructive points of view on the reinforcement of the project. alliance". He was shown talking to reporters about Fuji TV news in Japan.
Fiat Chrysler estimated that Nissan and Mitsubishi would achieve 1 billion euros in savings per year through this transaction.
Collaboration between automakers has gained momentum in recent years as they seek to strengthen their technological capabilities in the search for electric vehicles, Internet connectivity and artificial vehicle intelligence. Car manufacturers are also subject to pressure from regulatory authorities, particularly in Europe and China, to offer electric vehicles to meet stricter pollution limits.
At a results conference call earlier this month, Fiat Chrysler CEO Mike Manley told shareholders that he was confident that there would be "significant opportunities" in terms of partnerships or strategic alliances in the next two or three years.
Manley said Fiat Chrysler was taking action to address Europe's weaknesses.
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This editor, Yuri Kageyama in Tokyo, Colleen Barry in Milan and Sam Petrequin in Paris contributed to the writing of this report.
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