Paris: Renault said that it would study "with interest" a 50-50 merger proposal from Fiat Chrysler, a deal that could reshape the industry as Renault reviews its options following the arrest in Japan of its chief executive.
Renault had for years tied its strategy to a partnership with Japanese automaker Nissan but this has come into question after the arrest and subsequent ouster of Carlos Ghosn at both companies.
After a board meeting over what it termed a "friendly" offer, Renault said it would enter talks on a merger that would forge the world's third-largest automaker.
Investors cheered the prospect, with Renault's shares soaring 15 per cent in afternoon trading in Paris, and Fiat Chrysler stock up more than 10 per cent in Milan. A deal would give Fiat access in particular to Renault's electric car technologies, allowing it to meet the strict CO2 limits being enacted by the European Commission.