Renault said that a proposed 50:50 merger with Fiat Chrysler will create new value. The company has promised to study the proposal with interest. It also said that the proposed Renault Fiat Chrysler merger will help expand its manufacturing footprint.
Fiat Chrysler, which put forth the proposal, said that the proposed merger with Renault will enable cost savings of more than $5.6 billion. The Italian-American company also said that no plants will be closed as a result of the merger.
The Renault board has said that it will give its reply in due course. The offer to merge Renault and Fiat Chrysler can create the third largest auto manufacturer in the world.
Fiat Chrysler is supposed to have made the proposal because the merger deal is expected to help the companies make advances in electric vehicles and self-driving vehicles.
The companies were in discussions to improve products and introduce new technologies. Fiat Chrysler believes that more could be achieved by combining the two companies.
“These discussions made clear that broader collaboration through a combination would substantially improve capital efficiency and the speed of product development,” Fiat Chrysler was reported as saying by CNN.
Established automakers globally have been seeking alliances to share the costs of developing new technologies including electric vehicles and autonomous driving. Germany’s BMW and Daimler have formed a joint venture to develop ride sharing and charging services.
Fiat Chrysler owns brands such as Jeep, Maserati, Dodge, and Alfa Romeo. North America is among its key markets and Renault has no significant presence in that market.