Mubasher: Italian-US carmaker Fiat Chrysler (FCA) and France’s Groupe Peugeot manufacturer PSA on Wednesday announced a binding agreement for a $50 billion 50/50 merger.

The combined company will be the world’s fourth biggest auto original equipment manufacturer (OEM) by volume, and the third largest by revenue with annual sales of 8.7 million units and collective revenue of around EUR 170 billion ($189.55 billion), the auto firms said in a statement.

The combined company will generate annual operating profit of EUR 11 billion, with operating profit margin of 6.6%.

The new company will have more geographic balance with 46% of revenues produced from Europe and 43% from North America.

The merger will result in annual cost savings of 3.7 billion by uniting the two auto manufacturers’ technologies and through shared purchasing agreements.

The merged company will have an 11-member board, with an independent majority, with five to be nominated by FCA and another five named by PSA.

“Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services,” PSA’s managing board chairman Carlos Tavares said.

The combination is expected to be concluded within the next 12 to 15 months.