Fiat Chrysler’s proposed merger with Renault aims to mitigate the costs of emerging technological and regulatory challenges by creating a company which will be the third biggest carmaker in the world.

On Monday, shares of Renault and Fiat surged following a proposed merger between the two carmakers.

Fiat’s shares rose by nearly 19% in early session trading in Milan while Renault’s shares jumped by 16%.

“Strong fits in product/scale, further indications that OEM consolidation is on the agenda, an opportunity to re-deploy capital at Renault, and confirmation of FCA as an M&A target, are positives,” wrote brokerage Jefferies.

Fiat’s advisers on the deal include Goldman Sachs, Nomura and boutique investment bank d’Angelin & Co.

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