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Fiat Chrysler and Peugeot boards meet to finalize merger

MILAN/PARIS — The boards of Fiat Chrysler Automobiles and Peugeot will meet separately on Tuesday to discuss finalizing an initial agreement for a $50 billion merger to create the world's number four carmaker, sources said. A source close to FCA said the two companies could announce the signing of a binding memorandum early on Wednesday, followed by a conference call to explain further details later in the day. The two mid-sized carmakers announced plans six weeks ago for a tie-up to help them deal with big challenges in the industry, including a global demand downturn and the need to develop costly cleaner cars to meet looming anti-pollution rules. Ahead of the meetings, entities representing the Peugeot family, Etablissements Peugeot Freres (EPF) and FFP, unanimously approved a proposed memorandum of understanding for the planned merger, a source familiar with the situation said. FCA and PSA have said they would seek to finalize a deal by year-end to create a group with 8.7 million in annual vehicle sales. That would put it fourth globally behind Volkswagen, Toyota and the Renault-Nissan alliance. PSA's Carlos Tavares will be chief executive and FCA's John Elkann — the scion of Italy's Agnelli family, which controls FCA through their holding company Exor — chairman of the combined company. The group will include the Fiat, Jeep, Dodge, Ram, Chrysler, Alfa Romeo, Maserati, Peugeot, DS, Opel and Vauxhall brands, allowing it to serve mass and premium passenger car markets as well as those for trucks and light commercial vehicles. Related Video:       Chrysler Dodge Fiat Jeep RAM Citroen Peugeot

NHTSA investigating Harman Kardon for software vulnerabilities

The National Highway Traffic Safety Administration is investigating infotainment units from Harman Kardon, which produces FCA's Uconnect, to determine if Harman Kardon systems used by other companies are also vulnerable to hackings. Researchers discovered a hole in the cellular connection to the Uconnect infotainment in a Jeep Cherokee. They were able to exploit it to gain access to the vehicle's brakes, radio, and other systems. In the wake of the hack, FCA pledged to send out 1.4 million USB drives to update the software. Politicians also attacked the automaker for not reporting the problem sooner, and NHTSA opened an investigation to find whether the fix worked. INVESTIGATION Subject : Software security vulnerability Date Investigation Opened: JUL 29, 2015 Date Investigation Closed: Open NHTSA Action Number: EQ15005 Component(s): EQUIPMENT All Products Associated with this Investigation Equipment Brand Name Part No. or Model No.Production Dates HARMAN KARDON R3R4 - Details Manufacturer: HARMAN INTERNATIONAL SUMMARY: On July 23, 2015, Fiat Chrysler Automobiles (FCA) submitted a safety recall report to NHTSA concerning a software security defect condition in approximately 1.4 million model year (MY) 2013 through 2015 vehicles equipped with Uconnect 8.4A (RA3) and 8.4AN (RA4) radios manufactured by Harman Kardon (Recall 15V-461). According to FCA, software security vulnerabilities in the recalled vehicles could allow unauthorized third-party access to, and manipulation of, networked vehicle control systems. Unauthorized access or manipulation of the vehicle control systems could reduce the driver?s control of the vehicle increasing the risk of a crash with an attendant increased risk of injury to the driver, other vehicle occupants, and other vehicles and their occupants within proximity to the affected vehicle. This EQ is being opened to obtain information from the supplier of Chrysler Uconnect units to determine the nature and extent of similarities in other infotainment products provided to other vehicle manufacturers. If sufficient similarities exist, the investigation will examine if there is cause for concern that security issues exist in other Harman Kardon products. Related Video:

Fiat To Pay $3.65 Billion For Remaining Chrysler Shares

Italian automaker Fiat SpA announced Wednesday that it reached an agreement to acquire the remaining shares of Chrysler for $3.65 billion in payments to a union-controlled trust fund. Fiat already owns 58.5 percent of Chrysler's shares, with the remaining 41.5 percent held by a United Auto Workers union trust fund that pays health care bills for retirees. Under the deal, Fiat will make an initial payment of $1.9 billion to the fund, plus an additional $1.75 billion upon closing the deal. Chrysler will also make additional payments totaling $700 million to the fund as part of an agreement with the UAW. The deal is expected to close on or before Jan. 20, according to a statement from Chrysler. Sergio Marchionne, CEO of both Fiat and Chrysler, has long sought to acquire the union's shares in order to combine the two companies. "The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization," Marchionne said in a statement issued by Turin, Italy-based Fiat. The deal eliminates the need for an initial public offering of the union fund's stake, which analysts had previously valued at $5.6 billion. Fiat went to court last year seeking a judgment on the price, but the trial date was set for next September. Marchionne can't spend Chrysler's cash on Fiat's operations unless the companies merge. In recent months he made it clear that he preferred to settle the dispute without an IPO, but filed the paperwork for the offering in September at the trust's request. Chrysler's profits have helped prop up Fiat on the balance sheet as the Italian automaker struggles in a down European market. The Auburn Hills, Mich., automaker earned $464 million in the third quarter on U.S. sales of the Ram pickup and Jeep Grand Cherokee, its ninth-straight profitable quarter. The results boosted Fiat, which earned $260 million in the quarter. Without Chrysler's contribution, Fiat would have lost $340 million. UAW/Unions Chrysler Fiat