Crawling Back? Renault Still Eager to Merge With Fiat Chrysler, Report Claims

Steph Willems
by Steph Willems
crawling back renault still eager to merge with fiat chrysler report claims

The proposed merger between two auto giants — Renault-Nissan-Mitsubishi and Fiat Chrysler Automobiles — went nowhere earlier this year, but the door to the deal never swung fully shut. That’s according to a report in the Wall Street Journal, in which sources claim talks are ongoing to rekindle the romance.

FCA snatched away its offer in June after the French government, which owns 15 percent of Renault, intruded into discussions, citing a need to have alliance partner Nissan fully on board. The Japanese automaker, embroiled in scandal and a serious financial slump, kept its distance from those earlier talks, offering polite but unenthusiastic public support as reports emerged of concerns about its autonomy and shrinking influence under such a marriage.

To get the deal back on track, Renault would need to loosen its ties with Nissan.

According to the WSJ report, Nissan wants to even out the lopsided relationship between it and its alliance partner. Sources with knowledge of the talks — apparently ongoing since June — say the Japanese automaker wants Renault to cuts its 43.4 percent stake in the company.

While Nissan holds a 15-percent stake in Renault, it does not enjoy the voting rights afforded to Renault. However, before Renault can partly divest itself of Nissan, the French government would first have to give a thumbs-up. In earlier discussions with FCA, France sought assurances related to plant locations and employment numbers.

In withdrawing its proposal, FCA claimed it had “become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Talks between the two automakers are expected to last through the end of the year, with the possibility of a memorandum of understanding related to an alliance restructuring signed by next month, sources claim. As you’d expect, no one at Nissan or Renault have anything to say to the media.

Under FCA’s proposal, the 50:50 merger, valued at $35 billion, would mean the creation of the world’s third-largest auto company and potentially lead to $5.6 billion in annual efficiencies, or so FCA claimed. The Italian-American company’s chairman, John Elkann, would reprise his role, with Renault CEO Jean-Dominique Senard likely serving as CEO. Overseen by an 11-member board, the new entity would be structured through a Dutch holding company.

[Image: Fiat Chrysler Automobiles]

Comments
Join the conversation
5 of 26 comments
  • SatelliteView SatelliteView on Aug 04, 2019

    Why has it become so prohibitively expensive to build cars that mega giants have to unite with other mega giants?

    • See 1 previous
    • Lorenzo Lorenzo on Aug 04, 2019

      There's massive overcapacity in the industry, and mergers provide cover for those mentioned "efficiencies" - shutting down excess assembly, engine, transmission, and parts plants. Without a merger, companies face too many political and public relations hurdles that prevent them from slimming down, short of bleeding red ink.

  • Conundrum Conundrum on Aug 05, 2019

    Renault used to book over $500 million annually in dividends from its 43% holding of Nissan. Who'd want to give that up? But then Nissan got Ghosn in trouble and all of a sudden, its profits in Qtrs 1 and 2 in 2019 vanished into thin air as well. So no juicy dividends going to Renault any more. Coincidence? Nissan is perfectly capable of ruining itself by itself, new Versas notwithstanding, and perhaps it really is struggling, but going essentially profitless is a great way to get your majority stakeholder off your back and looking for better opportunities elsewhere. It's a cunning plan that may result in Nissan slitting its own throat before it recovers and sees it itself for what it really is - a second tier automotive company but independent enough to be proud of its mediocrity.

    • Inside Looking Out Inside Looking Out on Aug 06, 2019

      Committing seppuku is the most honorable way to get off the stranglehold of mean Gaijins. As Mark would say: I can feel the hand of a stranger And it's tightening around my throat Heaven help me, Heaven help me Take this stranger from my boat.

  • Randy in rocklin The Japanese can be so smart and yet so dumb. I'm America-Japanese and they really can be dumb sometimes like their masking paranoia.
  • Bunkie The Flying Flea has a fascinating story and served, inadvertently, to broaden the understanding of aircraft design. The crash described in the article is only part of the tale.
  • Master Baiter "I like the Earth."The idea that modern combustion engines are incompatible with the ongoing survival of the Earth, or of humanity, is breathtakingly stupid. Climate alarmism is akin to a religion--one to which I do not subscribe.
  • Skippity Key takeaways.Toyota is run by competent businessmen.Art doesn’t like Toyota.
  • MaintenanceCosts Audi has been a full player in the German luxury club for 20 years. It started to get there with the first A4, which was a 500-foot home run, and then achieved full recognition with the spectacular D3 A8.
Next