Fiat Chrysler shares surge on report of merger talks with French automaker

Fiat Chrysler Automobiles assembly workers build 2019 Ram pickup trucks at the FCA Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.

Rebecca Cook | Reuters

DETROIT -- Shares of Fiat Chrysler surged as much as 8% Tuesday after the Wall Street Journal reported that the automaker is in talks to combine with Peugeot-owner PSA Group.

One possibility for the deal, according to the report, which cited unnamed sources, is an "all-share merger of equals" with Peugot CEO Carlos Tavares leading the combined companies. The deal, according to the news outlet, would "create a $50 billion trans-Atlantic auto giant."

The Journal warned that the talks between the company are fluid, and a final deal may not be reached.

Fiat recently was in talks to combine with Renault, but the deal crumbled after Fiat couldn't win over the French government, which is a large Renault shareholder, and Nissan Motor, which is a Renault partner.

PSA spokesman Pierre-Olivier Salmon declined to comment on the report, saying in an email that the company does "not comment on market rumours."

Fiat Chrysler, which is scheduled to report third-quarter earnings Thursday, did not immediately respond for comment.

Fiat Chrysler, the world's seventh-largest automaker, has been at the center of merger talks for several years.

Former Fiat Chrysler CEO Sergio Marchionne, who died in July 2018, propelled the company into the conversations with other automakers in an investor presentation called "Confessions of a Capital Junkie" in 2015.

The presentation called for industry consolidation in an attempt to get automakers to stop wasting capital on redundant technologies. He argued that the "potential savings are too large to ignore" for the industry, particularly as costs significantly increase for emerging technologies such as autonomous and all-electric vehicles.

Marchionne's efforts included proposing a potential merger with General Motors in 2015. Marchionne emailed the proposal to GM CEO Mary Barra, who later said the offer was vetted by the company's management and board, which gave "strong support" for GM to continue on its own.

Marchionne's successor, current CEO Mike Manley, reportedly told reporters earlier this year that the company remains open to merger talks, however it can continue on its own.

"Strategically, we have a solid future and clear plans that are being invested in and are underway now," Manley said in August, according to Reuters.

"That isn't to say if there is a better future through an alliance or partnership or merger we wouldn't be open and interested to it," he said at the time.

Read the full story in the Wall Street Journal here.

Read More