Shares of both companies jumped on the news of the offer, which would see each side’s shareholders split ownership in the new manufacturer.
Automakers have collaborated more in recent years to build their technological capabilities in developing electric cars, self-driving vehicles and in-car connectivity. Regulators, particularly in Europe and China, are pushing automakers to produce electric vehicles and meet tougher climate change regulations, pressure that only grew after scandals over the amount of pollutants emitted by gas and diesel-powered engines.
Analysts at financial firm Jefferies said it was “hard to disagree with the logic” of the deal, as there is a strong fit in the markets each company covers and the brands they offer. Investors were nevertheless enthusiastic about Fiat Chrysler’s plan, pushing the company’s shares up 8% and Renault’s 12%.