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By Laurence Frost
PARIS (Reuters) – Fiat Chrysler is discussing a special dividend and enhanced job guarantees to convince the French government to support the automakers' merger plan, sources close to the talks said.
This improved offer, if it were formalized and accepted, would also mean that the activities of the merged company with its headquarters in France and that the French state would obtain a seat on its board of directors, announced Sunday to Reuters two people aware of the case.
CFA spokesman Shawn Morgan declined to comment. The French government, Renault's largest shareholder with a 15% stake, also declined to comment. A spokesman for Renault did not respond to calls and messages asking for comments.
The Italian-American FCA has engaged in intensive discussions with Renault and the French government on the $ 35 billion merger proposal presented last Monday to create the world's third largest automaker.
The concessions under discussion are not final and depend on other aspects of an emerging compromise agreement, the two sources warned.
They nevertheless increase the chances that the proposed merger will be approved by the Renault Board of Directors, in which the French State has two seats. The council meets again on Tuesday.
Some French badysts and executives have expressed doubts about the € 5 billion cost savings and so-called investments, and the fact that this proposal represents fair treatment for Renault's shareholders.
A Renault dividend would enhance the valuation in their favor, with a proposed dividend of 2.5 billion euros to FCA shareholders. The sources did not specify the potential size of a Renault payment.
According to the merger plan submitted on Monday, the two carmakers would be acquired by a publicly traded Dutch holding company, whose ownership would be shared equally between current FCA shareholders and Renault shareholders, after payment of the fees. a special dividend.
FCA had proposed to set up the group's operational headquarters in a neutral city, probably London, but said it was ready to base it in the Paris region, thus meeting a key demand from the French government, have said both sources.
The French government should also be given a seat on the board of directors, reflecting its 7.5% stake in the merged company, the public said.
Nissan, whose 15% stake in its French partner will also be diluted to 7.5% of the new group, is given a seat on the board as part of the plan unveiled on May 27th.
The guarantees of maintaining blue-collar jobs and Renault's French industrial sites would also be extended to four years compared to the two proposals originally proposed under the compromise under discussion, added the same sources.
The pro-business French government and the Italian populist administration support the merger in principle, but tense relations between the two could still frustrate the agreement if one of the parties feels disadvantaged.
(Report by Laurence Frost, Additional report by Giulio Pioveccari in Milan, edited by Richard Lough)
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