French govt stance derails Fiat-Renault merger plan

07 Jun 2019


US-Italian car maker Fiat Chrysler Automobiles has walked out of its proposal for a 50:50 merger with Renault barely 10 days after it first articulated its interest to merge with the French carmaker citing the difficult political situation, among other things.

‘It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully’, FCA said.
The French government, which has a 15 per cent stake in Renault, is reported to have made clear its lack of enthusiasm to go ahead with the proposal. It explains why FCA made the reference to ‘political conditions in France’ and marks a rather tepid end to what was seen as a grandiose marriage.
In an official press release, FCA has said that the political conditions in France do not currently exist for the merger to proceed successfully.  A meeting of the board of Fiat Chrysler Automobiles NV convened under the chairmanship of John Elkann, resolved to withdraw with “immediate effect” its merger proposal made to Groupe Renault. 
FCA has expressed its gratitude to Groupe Renault, its chairman and chief executive officer in particular, and also the Alliance partners at Nissan Motor Company and Mitsubishi Motors Corporation, for their engagement on everything regarding this proposal all along. 
Renault SA’s board of directors met under the chairmanship of Jean-Dominique Senard, to review the interest proposal received from FCA (Fiat Chrysler Automobiles) for the potential 50:50 merger. The board could not take a decision due to the request produced by the representatives of the French state to postpone the vote to a later council. Regardless, FCA has further said that the Italian-American brand will continue to deliver on its commitments through the implementation of the independent strategy. 
If pushed through, the merger would have created the third largest automaker in the world after Volkswagen and Toyota with sales of 8.7 million units.
Meanwhile, auto majors like Jaguar Land Rover and BMW as well as Toyota and Subaru have separate announcements to collaborate in the electric space.
FCA said it would continue its search for an ally and there is no reason to believe why it will not be Grouped PSA all over again.
The planned Renault-FCA merger did not have a berth for Nissan and would have reduced its stake even further in the process. 

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