Fiat Chrysler abandons Renault's merger offer, France ingested alleged

Fiat Chrysler has withdrawn its merger offer on an equal footing with the Renault Group, and people close to the negotiations between the two companies point to what they have described as interference by the company. French government.

This sudden decision was announced in a statement issued by the Italian-American builder shortly after midnight, European time, stating that, if Fiat Chrysler's management remained "firmly convinced" of the reason for being the proposed merger it has become clear that political conditions do not currently exist in France for such a combination to be successful. "

Fiat Chrysler's decision to withdraw its proposal was taken abruptly: less than three hours earlier, the two companies were preparing to issue a statement stating that the merger plans would materialize after the board's approval source level closely informed about the talks between the two companies.

"We went very quickly in different directions," he told CNBC. "He turned a dime."

On May 27, Fiat Chrysler presented its initial merger proposal after several months of discussions between the two companies. They had initially begun discussions on more limited measures, including the joint development of new product platforms, CNBC reported earlier. But as escalating contacts, executives including FCA CEO Mike Manley and his Renault counterpart, Jean-Dominique Senard, realized that they had the ## 147 ## This is an opportunity to take a decisive step and combine their strengths.

There was relatively little overlap in the product lines and each company had strengths that could offset the weaknesses of the other, said many analysts after studying the proposal. Fiat Chrysler, for its part, owned the powerful Jeep and Ram brands, while Renault is a leader in the development of autonomous and electrified vehicles.

The board of directors of the French manufacturer quickly expressed its initial interest in the merger proposal, which, according to analysts, is hardly surprising because they have been talking to each other for months. According to industry observers, it was generally expected to give more approval on Tuesday, but the first meeting of the board of directors ran unresolved until Wednesday.

From the beginning, several potential obstacles appeared. This included Renault's long-standing alliance with Japanese automakers Nissan and Mitsubishi. These relations are strained since the arrest last November of the former head of the Renault-Nissan-Mitsubishi Alliance, Carlos Ghosn, for corruption. Several observers wondered whether this really resulted from Nissan's desire to further control the three-way partnership. .

The merger evoked by the Japanese has sparked some concern, said a veteran of the auto industry with close links to Chrysler, said Nissan and Renault, but that should not scare the market.

If this were the case, said the person closely informed of the negotiations held with CNBC, Nissan expressed interest in the agreement and the potential benefits to the Japanese manufacturer. In its initial merger proposal, Fiat Chrysler foresaw 5 billion euros in potential synergies, including 1 billion for Nissan and Mitsubishi.

Instead, Fiat Chrysler's proposal began to collapse as a result of the "combined demands and pressures" of the French government, the insider said informed of the talks. It started just hours after the announcement of the original proposal. The French finance minister had formulated three main requirements, including the need to preserve all jobs and factories of Renault in France.

This has been expanded to include demands regarding the location of the merged company's headquarters and the composition of its board of directors, the insider explained, adding that "the last one" would have occurred late Friday when the enlarged meeting of the Renault Board of Directors.

After several attempts to conclude, the French CGT voted "no" on the proposed merger, according to Reuters. Nissan, which according to some, was also going to give up, abstained. All the other directors approved the proposal, but for the government representatives who requested that a final decision be postponed from one week to the next by going to Tokyo for a new consultation with Nissan.

"It was clear and more and more obvious that it was not an environment conducive to the integration of the proposal," said a Fiat Chrysler official, highlighting the Ironic that there remains "a very cordial relationship" between the two companies, and in particular, between CEOs Manley and Senard. The 66-year-old Renault CEO is now in a very difficult position, "said the veteran of the sector, linked to several automakers.

Senard has been tipped by the French government – which holds 15% of the automaker – after the resignation of former Renault president, Ghosn, but is now on the outs as a big supporter of the merger proposal.

"It is unfortunate that this proposal has failed so quickly," said Karl Brauer, an analyst at Kelley Blue Book, "although it's better than letting it hang around for weeks or months, and then fail.

What will happen next is uncertain, said Fiat Chrysler insider, "never say never," and it is possible that clearer ideas prevail, but it is unlikely that the merger proposal will be relaunched soon.

Fiat Chrysler could also consider other possibilities of merger. Information released earlier this year suggested that the company might want to partner with PSA, the other major French automaker. The CEO, Manley, said that he was more than willing to continue operating independently at a media roundtable at the International Auto Show of the year. North America in Detroit last January.