Fiat Chrysler/Peugeot Synergies

Fiat Chrysler and Peugeot have announced a 50/50 merger, with sales of $190 billion for the combined company. A key reason for the merger is an annual cost savings of $4.1 billion from “a more efficient allocation of resources for large-scale investments in vehicle platforms, powertrain, and technology and from the enhanced purchasing capability inherent in the combined group’s new scale.” As with most mergers or acquisitions, whether they synergies are realized will be an important determinant of whether the merger is successful.