The board of French carmaker PSA Group has approved a plan to merge with Italian-American rival Fiat Chrysler Automobiles NV, according to people familiar with the matter.

Fiat Chrysler’s directors, as well as the board of its largest shareholder, Exor NV, are scheduled to meet later Wednesday to discuss the proposal, the people said, asking not to be named because the discussions are private.

A merger of Fiat Chrysler and PSA, the No. 2 for car sales in Europe, would create a regional powerhouse to rival Volkswagen AG, and have a stock-market value of about US$49 billion — comparable to Japan’s Honda Motor Co. The tie-up would also bring together two auto-making dynasties, the billionaire Agnelli clan in Italy and the Peugeot family of France.

A Fiat spokesman wasn’t immediately available to comment. PSA, the maker of Peugeot and Citroen cars, declined to comment.