French carmaker PSA and US-Italian rival Fiat Chrysler have signed an agreement to create the world's fourth largest automaker, they said in a joint statement on Wednesday.

"Fiat Chrysler Automobiles and Peugeot SA (Groupe PSA) have today signed a binding combination agreement providing for a 50/50 merger of their businesses to create the fourth largest global automotive original equipment manufacturer by volume and third largest by revenue," the statement said.

It added there would be "no plant closures resulting from the transaction."

The combined group will have a workforce of more than 400,000, total revenues of close to 170 billion euros ($190 million) and annual unit sales of some 8.7 million vehicles of the brands Fiat, Alfa Romeo, Chrysler, Citroen, Dodge, DS, Jeep, Lancia, Maserati, Opel, Peugeot and Vauxhall.

The combined group would be headquartered in the Netherlands, and continue to be listed on the Paris, Milan and New York stock exchanges
The combined group would be headquartered in the Netherlands, and continue to be listed on the Paris, Milan and New York stock exchanges AFP / Harold CUNNINGHAM

The joint entity will have "the leadership, resources and scale to be at the forefront of a new era of sustainable mobility," PSA and Fiat Chrysler said.

The tie-up will "deliver approximately 3.7 billion euros in estimated annual synergies."

The merger was expected to be completed in 12-15 months, the statement said.

The combined group would be headquartered in the Netherlands, and continue to be listed on the Paris, Milan and New York stock exchanges.

Fiat Chrysler chief John Elkann will be chairman and PSA's Carlos Tavares chief executive.

Chrysler