May 27 (UPI) -- Fiat Chrysler said Monday it is planning to merge with Renault in a deal that would create the world's third largest car manufacturer.
According to a statement by Fiat Chrysler Automobiles, it delivered a non-binding letter to the Board of Groupe Renault proposing to combine their business in a 50-50 merger.
The deal, if approved by their boards, would see both FCA and Groupe Renault shareholders own 50 percent of the company, which would be overseen by a majority independent board of directors.
"The FCA proposal follows initial operational discussions between the two companies to identify products and geographies where they could collaborate, particularly as they develop and commercialize new technologies," the statement said.
Those discussions between the two companies showed that collaboration would be a good use of resources as they look to develop and then commercialize new technologies, Fiat Chrysler said, adding that arguments for the merger were strengthened by "the need to take bold decisions" in an industry under great transformation, specifically in terms of autonomous driving, among others.
Fait Chrysler said the merger would generate $5.6 billion in savings while no plants will be closed because of this deal.
The merger transaction will be conducted under a Dutch parent company and its board will consist of 11 members, with the majority being independent and four from each group as well as one nominee from Nissan.
The merger will bring together complementary strengths, creating "a brand portfolio that would provide full market coverage with a presence in all key segments from luxury/premium brands, such as Maserati and Alfa Romeo, to the strong access brands of Dacia and Lada."
The combined annual revenues of the companies would be almost $190 billion with a net profit of more than $8.9 billion based on 2018 results, it said.
"This proposal offers the opportunity to create the #3 global automotive company with broad, complementary and strong brand and geographic presence and important strengths in transforming technologies," FCA said. "It also confirms and enhances the value of the existing alliance and its potential to become even stronger in the future."