Fiat Chrysler Automobiles and Peugeot maker PSA Group are aiming to sign a formal agreement next week to combine into the world’s fourth-biggest automaker, according to people familiar with the matter.
Progress is being made on the memorandum of understanding even though some outstanding issues still have to be resolved, said the people who asked not to be named because the information isn’t public.
Reuters reported that PSA has called a called meeting of its supervisory board for Tuesday.
Ways to assess potential FCA liabilities that have come to light since a broad outline of the accord was unveiled Oct. 31 are still under discussion, they said, adding that more than 100 managers are participating.
Following the unveiling of the merger plan, rival General Motors hit FCA with a racketeering lawsuit alleging a bribery and corruption scheme. FCA has called the accusations “meritless.”
In a separate development, Italian tax authorities claimed FCA underestimated the value of its U.S. business by 5.1 billion euros ($5.7 billion) following its phased acquisition several years ago. FCA has said it “strongly” disagrees with the case, which could potentially lead to a levy of as much $1.5 billion.
A merger of Fiat Chrysler and PSA, the No. 2 for car sales in Europe, would create a regional powerhouse to challenge Volkswagen Group.
Reuters contributed to this report.
Under the plan, the new company based in the Netherlands would be headed by PSA CEO Carlos Tavares, while FCA Chairman John Elkann would keep his role as chairman.
The combination would leave Tavares, who turned around PSA and the money-losing Opel brand it acquired, to figure out how to improve Fiat’s struggling operations in Europe. Fiat’s deep Italian roots, along with the French government’s 12 percent stake in PSA, may make any plans to slim down the new entity more difficult.
Representatives for FCA and PSA declined to comment. The companies had said they aimed to sign a deal before the end of the year.
