ROME—Fiat Chrysler Automobiles NV and CIR SpA said Wednesday they signed a memorandum of understanding to merge some of Italy's biggest newspaper businesses in a deal between two of the country's leading business families.

In separate statements, the companies said they will combine CIR's Gruppo Editoriale L'Espresso, which includes the highly popular la Repubblica daily, and Fiat Chrysler-majority controlled Itedi, which publishes the Turin-based La Stampa and Genoa-based Il Secolo XIX newspapers.

Fiat Chrysler is controlled by the Agnelli family, and CIR is controlled by the De Benedetti clan.

In a country where control of media businesses is considered a powerful tool to advance the owners' interests, Wednesday's announcements represent a jolt for the industry—which has been hit by lower advertising and a drop in newspaper readership.

"Despite the structural difficulties of publishing, especially in Italy, I have confidence in the prospects for the group," said Rodolfo De Benedetti, CIR chairman, in the company's statement.

Car maker Fiat Chrysler reiterated it aims to increase focus on its core business.

CIR said it will be the controlling shareholder with a 43% stake of the new combined group, which had total revenue of about €750 million ($817.5 million) last year. Itedi will be incorporated into Gruppo Editoriale L'Espresso.

Fiat Chrysler, which will own around 16% of the new group, said it will distribute its entire stake to holders of its common shares.

The merger, which is subject to regulatory approvals, is expected to close in the first quarter of 2017, the companies said.

As part of the deal, Fiat Chrysler also will distribute to its holders of common shares its 16.7% stake in RCS MediaGroup SpA, which owns Corriere della Sera, another influential Italian newspaper.

Write to Liam Moloney at liam.moloney@wsj.com

(END) Dow Jones Newswires

March 02, 2016 19:35 ET (00:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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