Paris: The proposed merger between Italian-American carmaker Fiat Chrysler Automobiles (FCA) and Renault has officially been called off due to uncommon political conditions in France.
FCA said today that it has withdrawn the proposal, saying it would be unable to reach an agreement with the French government.
FCA said in a statement that it “remains firmly convinced” of the interest of its offer but “political conditions do not currently exist in France to carry out such an arrangement”.
Renault, one of France’s top manufacturers, announced earlier that its board of directors had not made a decision following a crunch meeting held at the request of the French State, the biggest shareholder in Renault with a 15 per cent stake. The government has warned against ‘any haste’ regarding the proposed 50/50 merger.
French Finance Minister Bruno Le Maire said he wanted a board meeting next Tuesday after a trip to Japan scheduled for the weekend, a source close to Renault said, AFP reported.
At Wednesday evening’s board of directors vote at Renault’s headquarters near Paris, all the directors were for the merger, apart from a representative of employees affiliated with the powerful CGT union and two representatives of Nissan — a long-time Renault partner — who abstained, the source added.
The two directors appointed by Nissan, however, asked “to write in the minutes that they would say yes with a little more time”.
Fiat Chrysler said: “FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties.”
“However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
On May 27, FCA delivered a non-binding letter to Renault’s board that proposed combining the business as a 50-50 merger.
Under the proposal, the combined businesses would have been split equally between FCA and Renault shareholders. The board would be a combined entity of 11 members, FCA said. The majority would be independent. FCA and Renault would get equal represent with four members each.
According to media reports, Nissan Motor, French automaker Renault’s existing partner, was the primary sticking point in the merger. The relationship between Renault and Nissan became stressed in the fallout over the arrest of former Renault-Nissan Alliance CEO Carlos Ghosn and subsequent power struggle.
Under the alliance, Renault owns 43.4 per cent of Nissan and Nissan owns 15 per cent of Renault.
|In testing times|
|The proposal, accordingly came to the fore as automakers illustrate their growing desire to form partnerships in an environment of increasing regulatory pressure, declining sales and rising costs associated with developing new technologies. On Wednesday, BMW and Jaguar too announced a collaboration on developing next-generation electric vehicle components.|