Published: Thu, June 06, 2019
Markets | By Otis Pena

Fiat Chrysler withdraws bid for Renault

Fiat Chrysler withdraws bid for Renault

The person didn't want to be identified because Renault's board was still meeting late Wednesday to discuss the proposal. An FCA statement says it has become clear that the political conditions don't now exist for the deal to proceed successfully.

Nissan's long resistance to its French partner's request to make the Renault-Nissan alliance "irreversible" could come at a high price for the Japanese automaker, which appears to be the real loser in the proposed merger of Fiat Chrysler Automobiles and Renault.

Renault's board will meet "at the end of the day" Wednesday regarding the merger that would create the world's third-largest automaker.

Since that's not the case, and "the proposal now being discussed is a full merger", Nissan warns that it might have to fundamentally review the "existing relationship between Nissan and Renault" given the severe corporate transformation the French will go through at the hands of such a deal.

Nissan's attempt to rebalance the alliance on the Japanese side would become an even more daunting challenge if Renault and FCA merge. Fiat Chrysler had proposed merging with Renault to create the world's third-biggest automaker, worth nearly $54 billion. "FCA will continue to deliver on its commitments through the implementation of its independent strategy", the company said.

A Renault board meeting Tuesday to study the deal was inconclusive. FCA, the French government and Renault declined to comment.

The deal would create the world's third-largest automaker, but it also raises hard questions about how Nissan would fit into a radically changed alliance.

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Bruno Le Maire said Wednesday on BFM television that the government is keeping up pressure on both carmakers to accept French government conditions for the proposed tie-up.

The combined company would produce some 8.7 million vehicles a year, more than General Motors and trailing only Volkswagen and Toyota.

Renault would also cede one of its two seats on a four-member CEO appointment committee to the French state, they said.

"We would go ahead with partnering or cooperating with FCA only if we can guarantee tangible benefits from sharing technologies with FCA and only if we can work out conditions that are satisfactory to us", the Yokohama-based executive said.

The two directors appointed by Nissan, however, asked "to write in the minutes that they would say yes with a little more time".

Renault's powerful CGT union is against a Fiat Chrysler merger, fearing the loss of jobs and arguing the proposal undervalues Renault and bails out Fiat.

"The case for combination is also strengthened by the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification and autonomous driving".

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