Fiat Chrysler and Renault May Be Merging to Create Third Biggest Automaker

This week Italian-American Fiat Chrysler has proposed a merger to Renault that could create the world’s third largest automaker, coming behind Japan’s Toyota and Germany’s Volkswagen.

Renault has said that it is looking over the proposal with interest and called the proposal friendly.

If the merger is successful, the $35 billion-plus tie-up would alter the landscape for automaker rivals.

Shares of both companies had seen gains as Wall Street learned the news but some analysts were weary.

“The market will be careful with these synergy numbers as much has been promised before and there isn’t a single merger of equals that has ever succeeded in autos,” Evercore ISI analyst Arndt Ellinghorst remarked.

According to sources who spoke to Reuters, if successful, the merged group will be chaired by Agnelli family scion John Elkann. Renault chairman Jean-Dominique Senard would likely become CEO.

The unidentified two sources also said that Renault’s board will hold informal work sessions within days and likely decide next week whether to enter an agreement with FCA to proceed with merger talks.

In a letter to employees seen by Reuters, FCA chief executive Mike Manley had said that a merger with Renault could take more than a year to finalize.

Renault shares saw gains of 15% while FCA’s Milan-listed stock was up a little over 11%.