"Discussions have opened a path to the creation of a new group with global scale and resources owned 50% by Groupe PSA shareholders and 50% by FCA shareholders," they said in a statement.
"In a rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility, the combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency."
The PSA board approved the merger and the Fiat Chrysler board met Wednesday. Executives have briefed regulators in the U.S. and France, the Wall Street Journal reported, citing unnamed sources.
Reports of the talks, including a potential "all-share merger of equals," as the Wall Street Journal first reported, sent shares of Fiat Chrysler surging as much as 8% on Tuesday. The stock rose by less than 2% in midday trading Wednesday.
The confirmation of the talks comes about five months after Fiat Chrysler ended merger discussions with PSA's French rival, Renault. However, this new merger is unlikely to face the same interference from the French government, a source told CNBC.
This is a breaking news story , please check back later for more.
—CNBC's Michael Wayland and Phil LeBeau contributed to this article.