Peugeot 4007, a rebadged Mitsubishi Outlander – Click above for high-res image gallery

'Tis the season to form mergers, and the latest could involve a large stock swap between Mitsubishi and PSA Peugeot-Citroen. The two automakers have longstanding ties that include such projects as the Mitsubishi iMiEV electric car (which Peugeot has shown as the iOn) and the Mitsubishi Outlander SUV (which Peugeot sells as the 4007 and Citroen as the C-Crosser). But now the rapprochement could be entering a new stage.

In a potential tie-in that could mirror rival French automaker Renault's alliance with Japanese automaker Nissan, reports suggest that PSA and Mitsu are on the verge of a stock swap. Insiders aren't sure what sort of arrangement could be brokered, but speculate that PSA could take effective control with a large minority stake in Mitsubishi in exchange for either stock in PSA, cash in hand or a combination of both.

The strengthened partnership would stand to help PSA, Europe's second largest automaker, compete not only with the Renault-Nissan Alliance, but also with Volkswagen, Europe's largest automaker which is teaming up with Suzuki for presence in Asian markets. Industry analysts, however, note that with PSA already burdened with growing debts and given Mitsubishi's relatively small production and market share, the move could be ill-advised for the French auto group. On speculation of the potential partnership, PSA stock reportedly fell 3.6 percent, while Mitsubishi's rose 7.5 percent – the largest respective drop and gain for each automaker in months. Thanks for the tip, Vladimir!

[Source: Bloomberg]

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