Fiat Chrysler Automobiles (FCAU - Get Report) pitched a merger deal to the French automaker Renault, the two companies announced early Monday, in a deal that would create the world's third-largest carmaker.
Together, the two companies could sell 8.7 million vehicles annually -- surpassing the output of General Motors, which through 2018 sold 8.4 million vehicles globally. Models would include famous names such as Maserati, Fiat, and Jeep and Ram.
The combined company could also draw from Renault's strong presence in Europe, Russia, Africa and Middle East and Fiat Chrysler's markets in North America and Latin America and its partnerships with Waymo, BMW and Aptiv. An alliance that would include Renault's Japanese partnerships with Nissan and Mitsubishi also "would be the largest global OEM alliance, selling more than 15 million vehicles annually," said Fiat Chrysler in a statement.
Renault and Fiat Chrysler both called the proposal a "50/50" merger.
Under the deal, half of the merged company would be owned by Fiat Chrysler shareholders and half by Groupe Renault shareholders. The "balanced governance structure" and majority of the boards would be independent, said Fiat Chrysler.
The proposal comes after discussions of a tie-up between the two companies that were leaked in the media over the weekend. The plan is to spot products and locations where the two automakers could work together, especially on new technologies, said Fiat Chrysler.
"These discussions made clear that broader collaboration through a combination would substantially improve capital efficiency and the speed of product development. The case for combination is also strengthened by the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification and autonomous driving," said Fiat Chrysler.
The merger would create a Dutch parent company whose board would at first be made up of 11 members. The majority of the board would be "independent and with equal representation of four members each" for Fiat Chrysler and Groupe Renault. One nominee would be from Nissan. The parent company would be listed on the Borsa Italiana of Milan, Euronext of Paris and the New York Stock Exchange.