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Fiat Chrysler Automobiles (FCAU) - Get Stellantis N.V. Report  shares surged Thursday after the Italian group confirmed its plans to merger with France's Peugeot PSA (PUGOY) in a $50 billion deal the pair said would create the world's fourth largest carmaker.

The 50-50 merger will save the combined groups more than $4 billion a year in cost synergies, the pair said, while creating a global automaker capable of production 8.7 million vehicles a year while generating €170 billion in says and €11 billion in annual profits. The group's top brands will include Fiat, Dodge, Alfa Romeo, Maserati, Opel and Vauxhall.

"This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity," said Peugeot PSA CEO Carlos Tavares, who will lead the combined group for an initial term of five years. "I'm pleased with the work already done with (Fiat's Mike Manley) and will be very happy to work with him to build a great company together."

Fiat shares were marked 9% higher in early Thursday trading and changing hands at €14.1 each after a delayed opening on the Milan stock exchange, while Peugeot shares slumped more than 8.5% in Paris to trade at €23.85 each as investors recalibrated stock prices for each group based on their new value in a combined entity and the €5.5 billion special dividend payable to Fiat shareholders.

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Shares in the combined group will be listed in Paris, Milan and New York the pair said, but will be domiciled in the Netherlands, where Fiat Chrysler has retained its tax-based residency since Sergio Marchionne moved the group there in 2014.

The merger also has the blessing of the French government, which owns a 12% stake in Peugeot -- compared to 15% holding in domestic rival Renault -- with Finance Minister Bruno LeMarie offering supportive comments on the merger's scale and job protections.