PARIS — Fiat Chrysler proposed on Monday to merge with France's Renault to create the world's third-biggest automaker and save billions of dollars needed to invest in the race to make new electric and autonomous vehicles.
The merged company would reshape the global industry: it would make some 8.7 million vehicles a year, leapfrogging General Motors and trailing only Volkswagen and Toyota.
Shares of both companies jumped over 10 percent on the news of the offer, which would see each side's shareholders split ownership in the new manufacturer.
Let our news meet your inbox. The news and stories that matters, delivered weekday mornings.
Renault welcomed the idea. The company's board met Monday at its headquarters outside Paris to discuss the proposal and said afterward that Renault will study it "with interest."
A merger would save 5 billion euros ($5.6 billion) for the two companies each year by sharing research, purchasing costs and other activities, Fiat Chrysler said in a statement. It said the deal would involve no plant closures, but didn't address potential job cuts.
The companies are somewhat complementary: Fiat Chrysler is stronger in the U.S. and SUV markets, while Renault is stronger in Europe and on electric vehicle developments.
The French government, which owns 15 percent of Renault, is "favorable" to the idea of a merger with Fiat Chrysler but wants to study its conditions more carefully, especially in terms of "Renault's industrial development" and employees' working conditions, government spokeswoman Sibeth Ndiaye said Monday.
Such a merger would show "our capacity to respond to European and French sovereignty challenges in a globalized context," she said. "We need giants to be built in Europe."
France's influential CGT union warned against job cuts in a merger, and said it wants the French government to retain a blocking stake in any new company.
Investors welcomed the proposal, pushing shares in Fiat Chrysler up 10 percent and Renault 14 percent in European trading.