By on June 3, 2019

Image: FCA

Fiat Chrysler’s desire to merge with Renault has the French government, which holds a 15 percent stake in the French automaker, more than a bit worried. The government has already issued a list of guarantees it wishes to see before giving its blessing to the potential tie-up.

Now, a report claims FCA is working hard to win France’s trust, promising board representation and a French headquarters for the proposed entity.

According to sources who spoke with Reuters, FCA is in talks with the French government (and, presumably, Renault), with an improved offer on the table.

Last Monday’s proposal detailed a 50:50 merger that would be carried out under a Dutch holding company. Shareholders in each company “would receive an equivalent equity stake in the combined company,” FCA said, with the new entity employing an 11-member board. Four members would hail from Renault, another four from FCA, and one member would be selected by Renault’s alliance partner, Nissan.

Per Reuters‘ sources, FCA has agreed to France’s request to give the government a seat on the board. Under the plan, France’s stake in the entity would fall to 7.5 percent. As well, the sources claim the automaker is willing to base the company’s HQ in Paris. This is a change from earlier plans, in which FCA hoped to base its center of operations in a “neutral” location like London.

As well, both sides are discussing a special Renault dividend, as well as a lengthened period of protection for French autoworker jobs and assembly sites. FCA initially proposed a two-year guarantee; this has now broadened to four years, sources claim.

Nissan, viewed as the company with the most to lose out of the potential merger, has voiced its cautious approval of the ongoing talks from the sidelines. FCA Chairman John Elkann offered a nod in its direction last week, saying an FCA-Renault merger would include Renault’s alliance partners.

Renault is expected to decide whether to turn down FCA’s proposal or continue forward with merger plans this week.

[Image: Fiat Chrysler Automobiles]

Get the latest TTAC e-Newsletter!

Recommended

20 Comments on “Report: Fiat Chrysler Launches Operation Woo France...”


  • avatar
    EGSE

    Not no but hell no. Why cave in to arrogant demands like this? FCA would do as well cutting a deal with North Korea and giving Kim Jong Un a seat on the board. They should tell France to shove it.

  • avatar
    cdotson

    I think FCA is the one who should be running scared knowing Nissan has considered approval.

    Nissan just had its government jail the French former CEO (well, he sure cultivated the perception of Frenchiness with his Versailles shenanigans) to prevent France/Renault from gaining too much influence over Nissan. That means that both Nissan thought Renault too aggressive in its merger pursuit and, with Nissan’s blessing of this FCA talk, they wish to be rid of Renault.

    An FCA merger would be a DaimlerChrysler redux, with Renault stripping/flipping Chrysler with the added benefit of consolidating Euro market share with Fiat.

    • 0 avatar
      Steve203

      “An FCA merger would be a DaimlerChrysler redux, with Renault stripping/flipping Chrysler with the added benefit of consolidating Euro market share with Fiat.”

      Actually, this is a rerun of the early 80s, when Renault controlled AMC/Jeep. The only difference is, according to former AMC CEO Joe Cappy, Renault did not understand Jeep at that time, so was content to let AMC do as it wished with Jeep, while Renault dictated passenger car design. I would hazard a guess that Renault is getting it’s head around the “Jeep thing” now.

      This is all a waste of time tho. Unless Renault is willing to divest itself of Nissan, this merger will never clear US anti-trust scrutiny.

      • 0 avatar
        ect

        Steve303, I see no reason why DoJ should challenge a Renault-FCA deal, as it would have no impact on the US market. unless and until a combined Renault-FCA actually merges with Nissan – which Nissan will do almost anything to avoid happening.

        At the moment, Renault has an equity stake in Nissan, but does not control it, and Renault has no presence in the US market at all. Hence, a Rensault-FCA merger, on its face, has no impact on competition in the US car market.

        The FCC has approved the Sprint-TMobile merger, which will have a much greater impact on the telecoms market than even a full FCA-Nissan merger would have on the car market – and no such merger is in the works. If Sprint-TMobile passes muster, then DoJ has no basis for challenging Renault-FCA.

        • 0 avatar
          Steve203

          “At the moment, Renault has an equity stake in Nissan, but does not control it,”

          Renault owns 43% of Nissan. That is enough to have effective control. Until recently Nissan and Renault shared CEO. When Renault owned 47% of AMC, AMC was forced to divest itself of AM General because US law prohibited foreign ownership of US defense contractors. I would be the most surprised person here, if the FTC decided that Renault and Nissan were not connected.

          wrt Sprint and T-Mobile, it’s about market share. As of Q3 of 2018 VZ had a 34.91% share of the cell market, T a 34.07% share. T-Mobile a 17.51% share and Sprint a 12.13% share. Combine T-Mobile and Sprint and they still rank third behind T and VZ, with a 29.64% share.

          As of April 2018, GM had a 16.9% US market share, Ford 14.6% share, FCA a 12.5% share and Nissan a 8.7% share. A combined FCA/Nissan would hold a 21.2% share, substantially larger than either GM or Ford.

  • avatar
    thornmark

    FIAT is hopeless, the real winner would be the Agnelli family, who would probably cash out of that losing proposition.

    • 0 avatar
      Lorenzo

      That’s the whole point: get the family fortune out of the capital-intensive, low-margin, cyclical auto business. This is the last big chunk of the Agnelli industrial empire that hasn’t been sold off piecemeal, but it’s the most high profile due to Fiat history in Italy. A merger that gets the Agnelli family off the hook for what happens to Fiat has been the goal all along.

  • avatar
    R Henry

    I view this as a last gasp effort to keep the FCA brands together. Jeep and RAM are the only assets, with Dodge and Chrysler being dead global brands–along with FIAT of course, which is dying even in home-turf Italy.

    Chrysler has been struggling for so long…this might be the only option short of liquidation.

    • 0 avatar
      Hummer

      I’m sorry but I still don’t hold Chrysler branding to the same mess GM had. I can think of only one instance where FCA (minus the F) is not one under 1 roof anywhere (separated Ram/Dodge, while a mile down the road a different guy sells Jeep/Chrysler). Chrysler and Dodge can each exist with only one product a piece as long as they are bound to the more profitable nameplates. Selling a traditional car or van under Ram or Jeep would be ridiculous, but as long as these brands are always bound together throwing that car under a Chrysler or Dodge name plate is a no brainer. There’s literally no hassle here. This gives dealers more product at no additional hassle.

      This isn’t GM where we had tons of stand alone Saab, Hummer, and Saturn dealerships throughout the country that each depended on that one product line. Any sales person in an FCA dealer should be trained (hah) to sell every car on that lot.

  • avatar
    Omnifan

    Since the US Government bailed out the majority of FCA that is keeping the whole entity afloat, the US should demand it be HQ’d in the States.

    • 0 avatar
      conundrum

      To bad Fiat met all the stipulations the US government set, paid back all the US and Canadian loans by mid 2011, brought out the Dart as promised and was thus able to buy the rest of Chrysler at a preset rate. FCA owes nobody anything.

      Or had you forgotten? You can actually google this stuff, you know.

      GM issued shares which barely went up. First the US, then two years later Canada, sold their GM shares at a loss compared to their face value of the bailout money advanced. Couldn’t wait any longer, I guess for them to get to $52. Both lost about $20 a share. GM then turned to China in a vote of thanks for the bailout.

  • avatar
    Jerome10

    Perfect example why France is a dying economy and nobody wants to do business there.

  • avatar
    Charliej

    I don’t know why there is so much hatred for the French. If it was not for the French there would not even be a United States of America. Without the French, the colonies would have lost the war of independence. France sent weapons and money to the colonies in support of the war. The final battle at Yorktown was won when the French fleet blocked the Chesapeake Bay and prevented the British fleet from evacuating British troops. The British army was trapped between the bay and Washington’s army and had to surrender. Without the French, all you loud mouth tough guys would be swearing loyalty to the Queen. So have a little more respect for those who saved your bacon, as it were.

  • avatar
    EGSE

    “Without the French, all you loud mouth tough guys would be swearing loyalty to the Queen.”

    Pointless comment of the day. For a start, realize this is the 21st century, not the 18th.

    And read the article and digest that the French Government is demanding a seat on the BOD. No other government gets such privileged treatment.

    That they want a special Renualt “dividend”.

    That they want the combined entity to be HQ’ed in France.

    And they are insisting on a guarantee of no layoffs or plant closings in France. That means any consolidation to make the merged company more profitable will be on the backs of anyone BUT the French. Hardly a merger of “equals”.

    And since you brought it up, The Queen is a much nicer person than that Adolf guy that the U.S. and Britain chased out of France. Now…….that fact is past history and has **no relevance** to the present discussion. Your assertions don’t either and just make you look silly.

    • 0 avatar
      Charliej

      I just get tired of reading the comments that reveal the stupidity of all too many Americans. And history is important. If you don’t know where you came from, how will you know where you want to go? For instance, you talk about “that Adolf guy”. We now have a president who is actively following “that Adolf guy’s” politics pretty much down the line. Look at where “that Adolf guy” lead his people and wonder where the US is being led now?

      • 0 avatar
        ToddAtlasF1

        That Adolf guy used identity politics to convince his supporters that they were victims of the nefarious deeds of others. Then he centrally planned an economy, took animal rights more seriously than human rights, held his party above God, and generally acted like a modern Democratic Socialist in every way except that he had enough losers in Germany to prey on, he didn’t need to bring them in. Stupidity isn’t a word you should use outside of a cry for help.

  • avatar
    genuineleather

    Such charming ignorance in the comments re: France’s demands.

    Renault is French company; even if the state owned 0%, the government would have a say in whether or not the company can be acquired by a foreign entity. If they can label yogurt a “strategic industry” (see: Danone) to block a takeover, you can bet they will do the same for something as economically and politically potent as auto manufacturing. If FCA wants this merger, they have to appease the French government, full-stop. Aside from the few Cerberus years, Chrysler has been owned by foreign corporations since the late 90’s, so American leverage is minimal; the Italians don’t have the financial resources, political will, or bureaucratic expertise to intervene.

    With their stake in Nissan, Renault is already well-positioned: the French government gets to exert control and wave the flag without dumping more public dollars in the business’ operating and R&D expenses. FCA is going to have to make a damn compelling offer to mitigate the loss of those benefits, which will ultimately almost certainly include a Paris HQ and multi-year job protections at French assembly sites. Just look at how many jobs have (not) been cut in Wolfsburg, despite the frightful local payroll expense and global nature of VW’s business.

  • avatar
    Jeff S

    I don’t hate the French but I don’t want their cars. Bad enough Chrysler was acquired by the Italians but to add insult to injury now the French. I don’t know which makes the worst cars reliability wise the Italians or the French. I don’t think the Chinese would do any worse, possibly better. Since the last Chrysler product I owned was over 17 years ago I am even less tempted with this news to buy one of their products. I will be more inclined to buy another GM or Ford product if this merger takes place. Probably buy Japanese or South Korean since they are a known quality.

    • 0 avatar
      Manta9527

      With all due respect, Jeff, the Italians are the reason we still have cars like the Dodge Challenger and Charger SRT, not to mention the Jeep line and Ram truck line.

  • avatar
    Jeff S

    Yes I understand the merger with Fiat but the Italians are known for unreliable cars. Great driving cars and some very nice looking cars but unreliable. Need I say more than Fix It Again Tony. I question how long the Challenger and the Charger will last under the leadership of Renault. As for Jeep and Ram those are the only brands that make a merger with FCA attractive to Renault. You need to give credit to Sergio for the Challenger and Charger and not so much Fiat. Sergio had some passion for vehicles unlike some of the other CEOs. I doubt Renault management will see Dodge in the same light as Sergio.


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • quaquaqua: Baaaaahahaha. Thanks for the laugh, buddy.
  • quaquaqua: Have you never rented a car before? “Full size” in car rental lots now are Camrys, Fusions,...
  • FreedMike: The same study found that HR people who actually judge job candidates by how they park shouldn’t be...
  • Jeff S: Yes I understand the merger with Fiat but the Italians are known for unreliable cars. Great driving cars and...
  • FreedMike: I don’t care much for image either, but I can say with zero hesitation that the AMG G-wagen I drove...

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Timothy Cain, Canada
  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States
  • Moderators

  • Adam Tonge, United States
  • Corey Lewis, United States