Shares of Fiat Chrysler Automobiles jumped 3.44% in the U.S. and Renault increased 4.18% in Paris after an Italian newspaper reported that the two automakers are holding talks again about a possible merger.
Even though talks between the two automakers broke down earlier this summer, rumblings they might be revived have persisted.
Fiat CEO Mike Manley indicated earlier this month that the company was open to resuming discussions about a merger. A key rationale for the combination of the French and Italian automakers is that EV/AV developments costs could be shared.
The Agnelli family, FCA principal shareholders, has indicated its broad support for a combination.
The Italian newspaper Il Sole 24 Ore reported that talks between the French and Italian-American car makers may be back on the table, after a proposed multi-billion dollar merger, that was set to create the world’s third-largest auto company, collapsed in June.
The European auto sector has been hit by a global auto slowdown with car sales plunging as the sector battles with the transition to electric and other alternative-fuel vehicles.
“This is a great example of two companies getting together, saying that the environment is changing, and we have to adapt It’s a continuation of a consolidation in the sector to survive in a changing environment,” said CMC Markets analyst David Madden told Reuters.
To achieve the goal, the French government could halve their interests in Nissan, thus convincing the Japanese company to accept its alliance partner joining the FCA group.
The report from Il Sole 24 ore will likely also gave the battered European auto sector some relief amid recent threats from President Trump to put tariffs on the European Union that would definitely impact the industry.
As it was, the Italian media reports the FCA and Renault are again talking put some new life into European shares battered by fears or recession, tariff threats and Brexit.
European stock markets ended at a two-week high on Wednesday, led by a rebound in Italian shares and as investors bet more concrete signals of stimulus from central bankers may help allay global slowdown fears.
It wasn’t just FCA and Renault that benefitted from the buzz as auto stocks overall got a boost from reported merger talks between Fiat Chrysler and Renault.