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Renault SA plans to resume merger negotiations with Nissan Motor Co. within 12 months, the first step in the creation of a larger automotive conglomerate that will involve an offer from both companies on Fiat Chrysler Automobiles NV, reported the Financial Times.
The creation of a new alliance council led by Renault's president, Jean-Dominique Senard, has strengthened confidence that both parties can advance plans for a merger, the newspaper reported Wednesday, citing unknown the thought of both parties.
A combination of Renault, Nissan, Fiat and Chrysler would create a manufacturer capable of competing with global competitors such as Volkswagen AG and Toyota Motor Corp. Carlos Ghosn, the former president of Renault and Nissan, arrested in Tokyo in November for charges of a financial crime, spoke of the merger of Renault and Fiat Chrysler two or three years ago, reported the Financial Times, citing two unidentified sources. Ghosn's proposal was stopped by the French government, the newspaper said.
Ghosn, who is free on bail pending trial, denied the charges against him.
Fiat Chrysler itself is seeking a partnership or merger, and President John Elkann has met with other competitors, including the French PSA Group, maker of Peugeot, to evaluate the possibility of an agreement, reported the newspaper.
Spokesmen for Renault, Nissan and Fiat Chrysler declined to comment on the report. Renault's shares rose 3.3% in Paris and those of Fiat 3.8% in Milan.
The French manufacturer, which owns 43% of Nissan's capital, has a market capitalization of 17.3 billion euros (19.5 billion dollars). Nissan, which in turn holds 15% of Renault's capital, has a market value of around $ 35 billion, compared with a 20.4 billion euro gain for Fiat Chrysler.
The imbalance of power between Renault and Nissan has led to a total merger between the two controversial. Before his arrest, Ghosn had planned to consolidate their alliance. Such an initiative met with resistance from Nissan, including from CEO Hiroto Saikawa. Instead of strengthening equity, Nissan has sought to improve Japan's negotiating position in a partnership that it believes has long favored the French side.
In the face of tensions, the idea of adding Fiat Chrysler to the mix with its Italian and American management and production cultures would be a major challenge. The fact that the most powerful shareholder of Renault is the French government, whose participation would be potentially diluted, further complicates the negotiations.
However, the Renault-Nissan alliance has often been cited as an example of a successful combination that did not go as far as a merger, supported by cross-shareholdings and cost reductions. However, the partnership was called into question by the scandal surrounding Ghosn. Insiders on both sides claimed that trust between the two teams had deteriorated since the leader had been imprisoned and ousted as president of the Nissan and Renault companies.
This month's partnership has resulted in a new governance structure to simplify operational decisions. Senard was named president of the alliance.
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