Renault’s board of directors will meet Tuesday to formulate its response to a merger proposal by Fiat Chrysler, which is likely to lead to talks aimed at creating the world’s third-largest automaker, the company said.

Fiat Chrysler has offered a “merger of equals” with its French rival, a prospect that has been welcomed by investors who have sent shares in both automakers up sharply since the bid was unveiled on Monday.

Together they would produce 8.7 million vehicles a year, creating an industry powerhouse with an expected market value of more than 30 billion euros ($33 billion).

A deal would hold advantages for both carmakers, with the Italian-US Fiat Chrysler a latecomer to the electric vehicle market, where Renault has built up a commanding lead.

The French firm meanwhile doesn’t have a presence in North America, where Chrysler is strong in the SUV and pick-up sectors.

Taking into account Renault’s alliance with Nissan and Mitsubishi, the enlarged group would be the world’s largest automotive group by a wide margin.

But a report in French financial newspaper Les Echos this week suggested that Renault will push for a higher bid from Fiat, potentially leading to frictions that could scupper a deal.

Renault’s share price has been battered in recent months following the arrest of its former boss Carlos Ghosn − who was also Nissan chairman − last November in Tokyo.

He awaits trial over charges of under-reporting his salary for years while at Nissan and using company funds for personal expenses.

The French government, which owns a 15 per cent stake in Renault, has already signalled its backing for a deal after the companies said no plants would be closed as part of their tie-up.

A combination “is a real opportunity for the French auto industry,” Finance Minister Bruno Le Maire told AFP on Friday.

But Le Maire said the government would insist that any deal respect four conditions, including the “preservation of jobs and industrial sites.” He also called for the continuation of the Renault-Nissan alliance and a commitment to participate in the future European battery partnership.

France also wants “balanced corporate governance” at the future group, Le Maire said.

Press reports have said Fiat chairman John Elkann, a grandson of Fiat’s emblematic former president Gianni Agnelli, would also be chairman after a merger. The CEO of Fiat Chrysler, Mike Manley, sold shares in the car giant for $3.46 million (3.1 million euros) the day after the company proposed a merger with French rival Renault, a spokesman said Friday.

Manley sold the shares to “cover a personal expense”, the spokesman told AFP.

A Dutch stock market regulator AFM filing showed Manley sold 250,000 shares on May 28 at $13.85 each.

Renault said earlier this week it is studying “with interest” a 50-50 merger proposal put forward by Fiat Chrysler (FCA) on Monday, a deal the would forge the world’s third-largest automaker.

Shares in FCA and Renault both jumped Monday on the news.

Talks between Fiat Chrysler and Renault have hit a roadblock over the financial terms of the proposed merger between the Italian-US and French carmakers, the French business daily Les Echos reported online Thursday, citing sources close to Fiat Chrysler.

Renault said earlier this week it is studying “with interest” a 50-50 merger proposal from Fiat Chrysler (FCA), a deal the would forge the world’s third-largest automaker.

The newspaper reported on its website that a source close to FCA said several Renault board members believe the terms of the offer need to be sweetened. But that is not how FCA sees things, said the source.

“The offer seems fair, it was approved by the board. It is take it or leave it, and fast!” said the source.

Meanwhile, the daily said Renault is unhappy as the offer is based on its share price on May 24, the day before the offer was announced, or 51.70 euros.

Renault’s share price has been punished since the arrest last November of its former chief executive Carlos Ghosn. Before then it rarely fell below 70 euros per share.

An AFP source close to the negotiations said such merger offers are rarely take it or leave it.

“These type of offers are certainly negotiable,” said that source.

A source close to Renault told AFP that without the carmaker’s board having adopted a position it was difficult to comment on rumours.

An AFP source close to FCA said “the offer is balanced in terms of valuation, governance and industrial strength.” A deal would hold advantages for both carmakers as FCA is widely seen as a latecomer to the electric vehicle market, where Renault is strong. But the French firm doesn’t have a presence in North America, where Chrysler is strong in the SUV and pick-up sectors.

Agencies