Fiat Chrysler, Peugeot in talks to combine

A MERGER OF FIAT CHRYSLER, PSA WOULD CREATE A RIVAL TO VOLKSWAGEN, AND HAVE A MARKET VALUE OF ABOUT $49 BILLION

Fiat Chrysler Automobiles NV’s talks to combine with French carmaker PSA Group point to intensifying pressure on global carmakers to join forces in squeezing costs and tackling the expensive shift to electric cars.

Fiat and Peugeot maker PSA confirmed on Wednesday they’re holding discussions aimed at creating one of the world’s leading auto groups. PSA shares rose the most in just over a year, while Fiat jumped as much as 11%.

The companies didn’t elaborate on what a deal would look like. Under one recent proposal, PSA would be the acquiring entity and have more board seats, according to people familiar with the matter. PSA’s board is holding an extraordinary meeting later Wednesday, said the people who asked not to be named because the information isn’t public.

A merger of Fiat Chrysler and PSA, the No. 2 for car sales in Europe, would create a regional powerhouse to rival Volkswagen AG, and have a stock-market value of about $49 billion—comparable to Japan’s Honda Motor Co. The tie-up would also bring together two auto-making dynasties, the billionaire Agnelli clan in Italy and the Peugeot family of France.

Their talks come several months after Fiat Chrysler and PSA, led by chief executive officer Carlos Tavares, explored a partnership on pooling investment to build cars in Europe, and following the collapse in June of negotiations between the ItalianAmerican carmaker and

French competitor Renault SA.

Automakers face tremendous pressure to pool their resources for platform development, manufacturing and purchasing as they battle through trade wars, a global slowdown and an expensive shift toward electrification and autonomous driving. Producers face the additional burden in Europe of new rules on emissions.

Meanwhile, Fiat Chrysler has called a board meeting for late Wednesday to discuss a possible tie-up with French rival Peugeot, two people familiar with the matter said.

Fiat Chrysler declined to comment.