Peugeot Declines Mega-Merge Proposed by Marchionne image

Sergio Marchionne proposed a mega-merge between Fiat, Peugeot Citroen and Opel in exchange for a stake in the new company.

Marchionne also said he was willing to take the struggling GM’s unit, Opel, if he was offered $5 billion (£3.1 billion) to $7 billion to be able to restructure the unit. The new group would be of utmost importance for the European auto market, accounting for 25% of the region’s sales, compared with VW’s 24.8%. The proposal came after Fiat, which also owns Ferrari and Alfa Romeo brands, plans to consolidate after Peugeot and GM announced their alliance earlier this year.

Peugeot is currently in a tough situation being forced to include a government representative in its board, in exchange for a €7 billion ($5.6 billion) loan from the French gov to avoid cutting thousands of jobs in the country. On the other hand Peugeot also prefers linking up with GM on development and purchasing projects, and also restructure it workforce before considering any other alliance.

The news came after Fiat reported its third-quarter profit ahead of forecasts made by analysts. The Italian automaker, which owns more than 60% of Chrysler, reached a trading profit of €951 million, due to strong sales in the US.