Fiat Chrysler and PSA Flirting With a Merging?

It’s almost like celebrity gossip these days. Except instead of trying to see who’s seated next to Taylor Swift or Selena Gomez at a swank joint on the Sunset Strip, we’re looking to see who’s chatting up Fiat Chrysler at the party.

The Wall St. Journal is reporting that Fiat Chrysler Automobiles and PSA Group of France are in talks to merge.

One possibility? An all-share merger of equals, with current PSA CEO Carlos Tavares taking the lead role and FCA chairman John Elkann remaining in the same role at the merged company.

FCA shares jumped by more than 7 percent to $14.18 in late afternoon trading, according to Automotive News. PR flacks from both companies declined comment.

FCA has seemingly been looking to go from single to cuffed since 2015, with failed overtures to General Motors and Renault along the way. A pairing with PSA would make sense, giving the combined company about 9 million units in production per year, while also helping bolster both companies’ small-car presence in key markets. Perhaps most importantly, such a merger would help pave the way for Peugeot’s planned return to America.

PSA had already played footsie with FCA once this year, before FCA had its failed flirtation with Renault.

Talks are “fluid” with all options seemingly on the table. As is often the case, there’s no guarantee that batted eyelashes and well-timed laughs will translate into a final agreement. Renault and FCA could even reopen talks should nothing come out of this.

Consolidation talk is often rumored, as automakers look to cut costs via sharing, while also adding scale and gaining exposure to new markets (or strengthening positions in existing markets – FCA could see benefits in Europe should this deal be sealed). Just like a junior-high dance, companies awkwardly talk with one another, even if partnerships don’t manifest.

Fiat Chrysler could probably use the boost in Europe, and PSA would likely love to use FCA’s dealer network to gain a foothold in America. On the other hand, mergers are complicated, and both PSA’s previous overture and FCA’s offer to Renault ultimately fell apart. The former failed in part because of concerns with a deal being financed by PSA stock and in part because FCA wasn’t sure it wanted more exposure to Europe. The latter failed because it wasn’t fully backed by the French government, a key stakeholder in Renault.

Meanwhile, the timing of any potential merger could impact ongoing labor talks between FCA and the United Auto Workers. Merging two into one is, as they say, complicated.

[Image: Daniel J. Macy/Shutterstock]