Fiat Chrysler Automobiles N.V. (FCAU) announced that it has delivered a non-binding letter to the board of Renault (RNLSY) proposing a combination of their respective businesses as a 50/50 merger. The FCA proposal follows initial operational discussions between the two companies to identify products and geographies where they could collaborate. Fiat said, "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...The combined business would sell approximately 8.7 million vehicles annually, would be a world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis".

Under the terms of the proposal, shareholders in each company would receive an equivalent equity stake in the combined company. The combination would be carried out as a merger transaction under a Dutch parent company. The board of the combined entity would initially be composed of 11 members, with the majority being independent and with equal representation of four members each for both FCA and Groupe Renault, as well as one nominee from Nissan. Further, there would be no carryover of existing double voting rights. However, all shareholders would have the opportunity to earn loyalty voting rights from the completion of the transaction under a loyalty voting program.

The parent company would be listed on the Borsa Italiana, Euronext, and the New York Stock Exchange. Before the transaction is closed, to mitigate the disparity in equity market values, Fiat said its shareholders would also receive a dividend of EUR $2.5B. In addition, prior to closing, there would be a distribution of Comau's shares to Fiat;'s shareholders or an incremental EUR $250M dividend if the Comau spin-off does not occur. The combination is expected to deliver in excess of EUR $5B of annual run rate synergies, incremental to existing Alliance synergies.