Billionaire clans such as the Fords, Porsches and Peugeots tend to flock together. They rub shoulders in the back rooms of auto shows, mingle at high-society events and share trepidations about the auto industry's fate. But they rarely combine their fortunes, at least until now.
The merger of PSA Group and Fiat Chrysler Automobiles is more than an ordinary automotive deal. It brings together the leading French and Italian industrial empires. The willingness of the Peugeot and Agnelli clans to join forces reflects the extent of fundamental change sweeping the industry as disruptive technology prods dynastic families to loosen their attachment to tradition.
Personal ties helped facilitate the union of PSA and FCA. In May, FCA Chairman John Elkann, the 43-year-old head of the Agnelli family and future chairman of the combined group, was getting ready to announce a very different deal -- a tentative agreement to combine with PSA's fiercest rival, Renault.
But before he did, the Italian heir visited Robert Peugeot for dinner in his apartment in Paris's affluent 16th district. The two had often dined together, but this time was different. Elkann was there to effectively write off the prospect of the Agnellis and Peugeots working together.
While the message was serious, Elkann's gesture was a sign of respect for a family relationship going back to the dawn of the automotive age. The depth of those ties would soon prove valuable when Fiat Chrysler's deal with Renault abruptly collapsed. That opened the door again to a combination that had been discussed more or less seriously for years.
Fiat and PSA "have helped define our industry from its very origins more than a century ago," Elkann wrote in a letter to employees following Wednesday's the announcement of the decision to merge. "Now we are joining forces to write a new, even more ambitious chapter in the history of the automobile."
The deal gives the two dynasties better chances of survival. In part due to the burden of tradition, Peugeot and Fiat had struggled with similar issues in the modern automotive era.
Both focused for too long on the congested European auto market and especially on low-margin compact cars well-suited for narrow Italian and French streets. The companies were both slow to expand in China and essentially absent in the U.S. before FCA joined with Chrysler following its 2009 bankruptcy.
While the families are close, FCA and PSA have been intense rivals for more than a century. In 1893, six years before Giovanni Agnelli was among those who founded Fiat SpA, the first car circulating in Italy was a Peugeot, a Type 3 sold to an industrialist in a northern town. The buzz made its way to Agnelli, a cavalry officer from a wealthy family who became interested in automobiles. He joined the effort in Turin that became Fiat and began selling its first car, the Fiat 3 1/2 HP, in 1899.
Roughly 120 years later, both families will lift their hands from the steering wheel in one respect: Neither are expected to have a controlling stake in the combined entity. The Agnelli family's holding company, Exor NV, will have a 14 percent stake, and the Peugeots will own 6 percent.
This would be a first for the Agnellis; the Peugeots lost their control following a 2014 bailout by the French government and Chinese automaker Dongfeng. The painful episode nevertheless left the company stronger -- in no small part due to the efforts of CEO Carlos Tavares, who will lead the combined company.