PARIS — PSA could discuss a merger deal with Fiat Chrysler Automobiles at a meeting of its supervisory board on Tuesday, two sources familiar with the situation told Reuters.
The sources said a planned memorandum of understanding between the two groups could be presented to the board at Tuesday’s meeting, but one of the sources also said details were not yet finalized and discussions were still ongoing.
A third source close to the matter said the two groups were working to sign a deal before Christmas, possibly by the end of next week.
Peugeot maker PSA and FCA are finalizing talks after they announced in October a plan for a $50 billion tie-up that would create the world’s fourth-largest automaker.
Progress is being made on the memorandum of understanding even though some outstanding issues still have to be resolved, sources told Bloomberg on Thursday. 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.” FCA Chairman John Elkann said last month that GM’s lawsuit did not worry him and he was confident of signing a deal with PSA by the end of this year.
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.
Under the plan, the new company based in the Netherlands would be headed by PSA CEO Carlos Tavares, while FCA’s 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.
FCA shares gained 2.7 percent to 13.33 euros as of 5:14 p.m. in Milan, giving FCA a market value of 20.7 billion euros. PSA was up 2.8 percent to 21.51 euros in Paris, for market value of 19.5 billion euros.
Reuters and Bloomberg contributed to this report