The merger of 50/50 will result in the fourth-largest automotive manufacturer in the world.

The rumors are true. Groupe PSA (France) and FCA agreed to a 50/50 merger. This will create the fourth-largest automobile manufacturer in the world with 8.7 million vehicles sold each year. Each shareholder of each company will own 50% of the equity in the new automotive group. This plan is expected to create an automaker with 80% of global sales and reduce costs by around EUR2.8 billion ($3.12billion at current exchange rates).

Based on 2018 results, the merger will result in combined revenues of almost EUR170 billion ($189.7billion) and a recurring operating loss of more than EUR11billion ($12.2billion). The agreement between the parties stipulates that the merger of PSA and FCA will take place under the control of a Dutch parent company. It will be listed on the New York Stock Exchange and Borsa Italiana in Milan and Euronext in Paris.

According to the agreement between the two automotive conglomerates the synergies won’t result in any plant closings. The board will be composed of 11 members, five from FCA and five from Groupe PSA. Carlos Tavares, the Chief Executive Officer, will serve a five-year term. He would also be a member.

Opel and Vauxhall both fall under PSA’s umbrella since the brands were purchased from General Motors in 2017. As a result of the PSA-FCA merger, the new automotive giant will bring about significant changes in the industry. They’ll be trying to reduce costs and optimize product offerings to synchronize lineups across all brands.

FCA had almost reached a deal with Groupe PSA a few months back to work with Renault on a 50/50 merger. However, was ultimately canceled by unclear “political circumstances”.