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Bloomberg
PSA Group has secured the backing of one of its major shareholders, the French government, for its plan to merge with Fiat Chrysler Automobiles NV, according to people familiar with the matter.
The French state, which holds roughly 12% in PSA and has board representation, is supporting a binding memorandum of understanding that could be approved this week, said the people, who asked not to be named because the deliberations are private. PSA directors are scheduled to meet on Tuesday to review the terms, which reflect minor changes to an accord unveiled October 31, the people said.
An official at the French finance ministry, and representatives at PSA and Fiat declined to comment. BPI, the French state-backed investor that holds the stake, didn’t return requests for comment.
The carmakers sketched out at the end of October their plan to combine to create a regional powerhouse to challenge Volkswagen AG. The new company would be based in the Netherlands and headed by PSA Chief Executive Officer Carlos Tavares. Fiat Chrysler Chairman John Elkann would keep his role as chairman.