Car giant Fiat Chrysler has confirmed it is in “ongoing discussions” about a mega-merger with Peugeot and Vauxhall owner PSA.
PSA, which operates UK Vauxhall factories at Ellesmere Port and Luton, also confirmed the talks which it said were “aimed at creating one of the world’s leading automotive groups”.
It comes after Fiat Chrysler ditched a previous attempted tie-up with another France-based car maker, Renault, earlier this year.
A merger between the US-Italian company and PSA could create a company valued at more than $50bn.
Shares in Fiat Chrysler had risen sharply on Tuesday on reports that the two companies were in talks.