French automaker PSA and American-Italian company Fiat Chrysler will merge their companies to form the world's fourth-largest automobile company. The two companies issued a joint statement on the merger on Wednesday, stating that a binding agreement has been signed to create an equity-holding company.

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Although the agreement will not close any plants of the two companies, the new unit plans also include cutting costs. This merger process is expected to bring about major changes in the global automobile industry. The new entity, formed after the merger of Fiat Chrysler Automobiles and Peugeot SA Group, will be the fourth-largest company in the world by vehicle sales numbers while becoming the third-largest company by revenue. The merger process will begin within six weeks of the announcement and the new entity will have a total market capitalization of $ 50 billion (about Rs 3.5 lakh crore).

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The merger plans of PSA and Fiat include cutting the annual expenditure of Rs 30 thousand crores without closing the plant. The name of the new entity has not been decided yet. Both companies currently employ more than 4 lakh people. Therefore, employee organizations in both the countries of France and Italy are afraid of a merger. Despite the company's assurances, NordlB vehicle analyst Frank Schopp says the group will not only save big after the merger but may also close the total plant.

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