Carlos Tavares, the chief of PSA, is to be the chief executive of the new company. Mr. Tavares, described by people who have met him as charming but tough, has already expanded PSA’s presence in Europe by acquiring Opel from G.M. in 2017.

John Elkann , the chairman of Fiat Chrysler, is to be the chairman of the new company. Mr. Elkann is a scion of Italy’s powerful Agnelli family, which has long controlled Fiat.

Mr. Manley did not discuss what his role would be in a merged company. He could stay on to run its North American operations, Fiat Chrysler’s main source of profit.

He rose to prominence in the company by heading its Jeep brand during a period of rapid expansion and was named chief executive in July 2018 when his predecessor, Sergio Marchionne, died after complications from shoulder surgery.

The merger will be accomplished by exchanging shares, with each company contributing 50 percent of the new entity. Shareholders of Fiat Chrysler will receive a special dividend of 5.5 billion euros. PSA shareholders will receive a special dividend of about €3 billion from the sale of the company’s stake in Faurecia , an auto-parts maker.

Investors in the two companies reacted differently on Thursday as they sorted through the deal’s details. Fiat Chrysler shares jumped by about 9 percent in Italian trading, while PSA’s fell by more than 11 percent.

The parent company will be registered in the Netherlands, which offers some preferential tax laws. Fiat Chrysler and PSA will each nominate five members to the new company’s board. The chief executive, Mr. Tavares, will hold the 11th seat.