Fiat’s founding family is considering a capital increase of about EUR2bn (US$2.58bn) and a possible merger with PSA Peugeot Citroen, an Italian paper has reported.

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The capital increase by the Agnelli family’s EXOR holding company – which holds about 30% of Fiat – would aim at keeping a significant stake in a merged company.


Fiat earlier this week said it was evaluating an alliance with Chrysler that would give it renewed access to the US market through Chrysler’s dealer network in return for its expertise with small cars.


Fiat and Exor both declined to comment.


Reuters said Italy’s Il Sole 24 Ore business daily had reported on Thursday that Fiat had been working for a month to obtain a syndicated credit line of up to EUR5bn, adding that banks UniCredit and Intesa Sanpaolo were willing to subscribe EUR1-1.5bn.

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“Peugeot’s market cap is currently EUR3bn and a complete takeover by Fiat could be financed with the rumoured EUR5bn loan,” UniCredit debt analyst Sven Kreitmair said in a note cited by the news agency.


“A combined Fiat-Chrysler-Peugeot group would be the third largest auto company in the world after Toyota and GM with a total production of 8.8m vehicles (2007 figures),” he said.


Fiat and PSA already two joint ventures, making vans and multi-purpose vehicles in France and Italy plus a car factory venture with local automaker Tofas in  Turkey. Fiat and Ford collaborated on the 500/Ka platform and a Fiat plant builds both model lines in Poland.


PSA also has a variety of ventures with Ford, BMW and Mitsubishi Motors, including a joint PSA/MMC assembly plant planned for Russia.


PSA group chief executive Christian Streiff has said he wants to deepen the existing partnerships rather than add new partners, Reuters noted.