Fiat Chrysler Loses the Urge to Merge, Withdraws Proposal to Renault
Following a whirlwind 10-day courtship, Fiat Chrysler withdrew its marriage proposal to Groupe Renault on Wednesday night, citing irreconcilable differences.
FCA blames France.
The proposed 50:50 merger with the French automaker, floated on Memorial Day, was snatched off the table following an FCA board meeting, the automaker stated in a release, adding that it had “become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
Renault’s board was expected to make a decision on Tuesday as to whether to reject the proposal or move into merger talks. That decision was postponed after the French government, which holds a 15 percent stake in Renault — and would see its influence shrink by half in a merger — pressured Renault to delay.
Last week, France reportedly asked FCA for certain assurances to earn its approval, including guarantees of a Paris headquarters for the new entity, the retention of all French workers for a four-year span, and a seat at the boardroom table. These guarantees, cited by sources close to the negotiations, were not confirmed.
FCA believed the new entity emerging from the union would enjoy numerous benefits with regard to platform and technology sharing, with both sides standing to save a combined $5.6 billion through shared development costs and purchasing. FCA Chairman John Elkann even offered a hand to Renault’s nervous alliance partners, Nissan and Mitsubishi.
Besides blaming France, the American automaker’s public statement contains a whiff of “you’ll miss us when we’re gone”-style hard bargaining tactics.
“FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties,” the company said.
In a statement issued Thursday morning, Groupe Renault expressed its “disappointment not to have the opportunity to continue to pursue the proposal,” calling the offer “timely” and “compelling.”
According to media reports, Nissan said it would not vote on the proposed merger, leaving the French government — which hoped to keep the existing alliance intact (and happy) — with cold feet. A struggling Nissan, like France, would see its influence watered down in such a merger. Reuters reports French finance minister Bruno Le Maire said his government would not approve a merger without the endorsement of Nissan.
However, a source close to FCA claims the Nissan angle is a cover, suggesting French President Emmanuel Macron was seeking a way out of the deal after facing blowback from citizens.
[Image: Fiat Chrysler Automobiles]
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