ROME, May 27 (Xinhua) -- French automaker Renault said it would "study with interest" a proposal from Italian-American rival Fiat-Chrysler that would merge the companies in a deal that could help reshape the global auto industry.
Fiat-Chrysler on Monday pitched the "merger of equals," which would create the world's third largest carmaker, a company that would have a significant presence in every major world market and in every market segment from electric and hybrid vehicles to compact cars and from trucks to luxury cars. It would also give the combined company the economics of scale to compete in the race for the technologies for self-driving cars.
Fiat predicted the combined company would save more than 5 billion euros (5.6 billion U.S. dollars) per year through the merger.
All told, shareholders in each of the two companies would end up owning exactly half of the combined company, which Fiat said would produce around 8.7 million vehicles per year. Only Germany's Volkswagen and Toyota from Japan would be bigger.
The next step will be for Renault to decide whether to recommend the proposal to its shareholders. If they do that, it will be up to shareholders from both companies to vote the deal up or down.
According to Marco Leonardi, an economist with the Department for the Study of Labor and Welfare with the State University of Milan, the deal will face some obstacles. For example, Fiat said it would not be necessary to close any production plants for either company, but it did not address the possibility of job losses.
"There's also the question of who will be in charge," Leonardi told Xinhua. "Fiat says it will be a 50-50 merger and that the board will include independent directors. But someone will have to be the head of the company. Will that person come from Fiat-Chrysler or from Renault?"
Roberto Alfonsi, an automobile sector analyst with ABS Securities, said there is also the problem of the role of the French state in Renault. The company was privatized starting in 1996, but the French state retains a 15-percent stake. That means the French government would own 7.5 percent of the combined company. The Italian government has never owned a stake in Fiat.
"Fiat shareholders could say they won't approve the deal unless the Italian state takes a similar stake in Fiat, or unless the French government sells its shares," Alfonsi said in an interview.
Leonardi said that despite the obstacles, the deal makes good sense. "Geographically, the companies complement each other, especially with Fiat lacking a strong presence in Asia," Leonardi said.
Leonardi pointed out that Sergio Marchionne, the famed Italian-Canadian businessman who shepherded Fiat's 2014 merger with Chrysler and who headed the new company until his death last year, said that the global marketplace will ultimately support six major carmakers. As a standalone company, Fiat is the world's eighth largest automobile maker, one rank ahead of Renault.
"This merger, or another one on the same scale, is probably necessary for the long-term survival of both companies," Leonardi said.
Alfonsi said the merger could spark a streak of other mergers between second-tier car makers.
It is not clear how the merger would impact Renault's alliance with Japanese carmakers Nissan and Mitsubishi. Media reports said Renault last year proposed a merger with its Japanese partners but was turned down.
Share prices for both Fiat-Chrysler and Renault jumped higher on the news of the proposed merger.
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