Published: Fri, June 07, 2019
Markets | By Otis Pena

FCA Withdraws Renault Merger Offer, Blames French Government for Stalling Deal

FCA Withdraws Renault Merger Offer, Blames French Government for Stalling Deal

The French government owns 15% of Renault and is seeking job and investment assurances, a seat on the merged entity's board, and for operational headquarters of the merged company to be in France.

Fiat Chrysler cited "political conditions in France" for withdrawing its offer to Renault.

"FCA remains firmly convinced of the compelling, transformational".

Renault's board had said on Tuesday that it was studying "with interest" the FCA offer but held off on granting approval pending further deliberations.

The French government said Thursday that it had placed four conditions on the deal during talks.

The French government, which maintains a 15% stake in Renault, said it would not approve a merger unless Nissan would still commit to the alliance.

Reports out of Paris indicated that Nissan's relationship with Renault was an additional challenge.

Fiat Chrysler late last month proposed the 50-50 merger, saying it would save more than 5 billion euros (US$5.62 billion) per year in purchasing expenses, and costs developing autonomous and electric vehicles.

A Renault employee familiar with the discussions said the board was moving in the direction of a deal Wednesday night, but provided no details.

Fiat Chrysler's US sales chief is suing the company, alleging that it withheld 90 per cent of his pay package because he testified in a government inquiry of sales reporting practices.

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Fiat Chrysler Automobiles (FCA) has withdrawn its merger proposal to French automaker Renault.

French Finance Minister Bruno Le Maire said that an agreement could not be reached between all partners in the negotiations on the government's conditions for a deal.

The American automaker thanked the heads of Renault, along with its Alliance partners Nissan and Mitsubishi.

Yokohama-based Nissan makes the world's best-selling electric auto Leaf. The ensuing process - including consultations with unions, the French government, antitrust authorities and other regulators - would take about a year.

Earlier Wednesday a person briefed on the matter said FCA had reached a tentative deal with France over merger terms.

FCA's proposal called for equal ownership between both FCA and Renault shareholders, creating a balanced governance structure with the majority of the board of directors being independent.

If the merged company were to include the Nissan-Mitsubishi alliance, too, it would be the No. 1 auto producer in the world. "From the beginning, the (French) state has wanted the necessary time to examine" the deal, the source said.

French budget minister Gerald Darmanin said he hoped the door had "not closed" on the possibility of a deal, adding Paris would be happy to re-examine any new proposal from FCA.

It could also have restricted access to some of the key technologies jointly developed over its 20-year marriage with Renault, such as the new CMF platform and driver-assistance systems such as ProPilot.

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