FRANKFURT/PARIS - Fiat Chrysler (FCA) said on Thursday talks with Peugeot owner PSA Group to create a $50 billion carmaking group were going well, despite FCA being sued for "substantial damages" by General Motors late on Wednesday.
General Motors (GM) filed the lawsuit in the United States, alleging FCA had bribed United Auto Workers (UAW) union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars.
"Talks are progressing smoothly," an FCA spokesman said on Thursday about discussions with PSA to create the world's fourth-biggest automaker.
Shares in FCA were down 3.4% at 0840 GMT, while PSA shares were 1.4% lower.
Asked whether the lawsuit might lead to a review of the two companies' valuations in the proposed merger deal, a source close to FCA replied: "No."
In a letter to employees, FCA Chief Executive Mike Manley said: "We are astonished by this filing, both its content and its timing. We can only assume it was intended to disrupt our proposed merger with PSA."
FCA will vigorously defend itself against this "meritless" lawsuit, the letter, which was seen by Reuters, said.
"We will not be slowed down by this act," Manley said, adding: "Let’s keep the performance up as it has clearly got some of our competitors worried."
PSA declined to comment on the GM lawsuit and its potential impact on the merger talks.
(Reporting by Edward Taylor in Frankfurt and Gilles Guillaume in Paris; Editing by Michelle Martin and Mark Potter)