The Strategist

Fiat Chrysler refuses to merge with Renault because of “uncertainty with French government”


06/06/2019 - 11:56



Italian-American automaker Fiat Chrysler Automobiles (FCA) withdrew its proposal to merge with the French Renault SA.



TuRbO_J via flickr
TuRbO_J via flickr
"It became obvious that there are currently no political conditions in France for the successful completion of such a deal," the FCA press release says.

Sources of The Wall Street Journal reported that the company is dissatisfied with too high demands of the French government. Earlier, the French authorities declared their readiness to support the merger, if the companies guarantee preservation of jobs and headquarters in the country, as well as a place on the board of directors.

“The French government behaved in an extremely unceremonious manner. They wanted to have the last word on all issues, which led to uncertainty, which eventually became unbearable,” said one source close to the FCA leadership.

The Wall Street Journal also notes that the main obstacle to the deal was the lack of support from Nissan. According to sources, two Nissan representatives on the Renault board of directors expressed their intention to abstain from voting on the merger.

FCA thanked the opposite party, in particular, Thierry Bollore, Chairman of the Board of Directors and Chief Executive Officer of Renault, as well as alliance partners of Mitsubishi Motors and Nissan Motor, for discussing a potential deal. The company noted that it still believes that the merger could bring significant benefits to all stakeholders.

Last month, FCA sent Renault a proposal for a merger on an equal footing, stipulating that the shareholders of both companies would own 50% each of the merged company.

The Renault - FCA merger could create a giant carmaker with a capitalization of about $ 37 billion, annual revenues of about €170 billion with capacities to produce 9 million cars per year. It would put it in third place in the world by this indicator after Volkswagen and Toyota.

Renault shares are cheaper by 0.65% in trading in Paris on Thursday, the cost of Fiat shares in Milan fell by 1%.

source: wsj.com