For the Italian-American car manufacturer Fiat, the “political conditions currently in France are not met” to achieve the merger with the Renault group.
The manufacturer Fiat Chrysler (FCA) withdrew in the night from Wednesday 5 to Thursday 6th June 2019, its proposed merger with Renault to form the world number 3 of the automobile, failing to obtain a quick commitment of the French group, curbed by the state shareholder.
The Italian-American car manufacturer Fiat Chrysler announced in a statement that it was withdrawing its offer of the merger with Renault, saying that “the political conditions (were) currently not met in France to carry out such a rapprochement”.
The board of directors of the diamond group, meeting Wednesday evening for the second day in a row, to study this proposal, was unable to make a decision.
Economy Minister Bruno Le Maire “has announced that he wants a (new) (administrative) council Tuesday (next) after his trip to Japan” scheduled for the weekend, said a source close to Renault. The minister wanted to talk with his Japanese counterpart in advance so as not to risk a divorce with Nissan, Renault’s 20-year-old ally.
During the meeting Wednesday night, at the headquarters of Boulogne-Billancourt, near Paris, “all the directors were for (the merger), apart from a representative of employees affiliated with the CGT, who was against, and the two representatives of Nissan” who thought to abstain, added this source. Nissan’s two directors, however, said “they could say yes with a little more time.”
Held aside from discussions between Renault and FCA until the announcement of the project ten days ago, Nissan, whose Renault holds 43% of the capital, and which controls 15% of Renault, feared to be marginalized in France. operation but also saw opportunities for technology sharing.
Nissan’s rejection in April of a stronger integration proposal with Renault precipitated Franco-Italian negotiations.
“We regret the hasty decision of FCA”
Relations in the Franco-Japanese partnership have stretched considerably since the arrest last November of the former emblematic boss Carlos Ghosn, indicted in Japan for various malpractices following reports by Nissan executives.
“We regret the hasty decision of FCA. Since the beginning, the State has wished that the necessary time is given to examine this structuring operation “, explained to AFP a source close to Bercy.
“Despite significant progress, a short time was still needed for all conditions set by the state to be met.”
The Mayor, speaking on behalf of the French state, the largest shareholder of Renault with 15% stake, had four conditions at the green light last week. The first of them was that this wedding respects the alliance with Nissan.
He also insisted on “the preservation of jobs and industrial sites, balanced governance and the participation of the future group in the European project of electric battery”.
Wednesday morning, he warned against any “haste”. “Let’s take the time, to do things well. It is a large-scale operation, “said the minister.
One of the fears was that this “marriage between equals” ultimately leads to Renault under the Italian flag.
The project envisaged the creation of a holding company based in Amsterdam and owned equally by the shareholders of Renault and FCA.
The Agnelli family, which owns 29% of Fiat Chrysler, would have seen its share mechanically diluted to 14.5%, but would have remained by far the largest shareholder, weighing nearly double the French state which would have fallen to 7.5% of capital.
The merger would have created a global giant
The current president of FCA John Elkann, grandson of the iconic Fiat president Gianni Agnelli, was tipped to preside over the new entity, while his Renault counterpart Jean-Dominique Senard would have assured the executive management.
The merger would have created a group of more than 30 billion euros of stock market valuation, producing 8.7 million vehicles per year.
Adding the volumes of Nissan and Mitsubishi, the two Japanese allies of Renault, the set would have represented nearly 16 million vehicles per year, far ahead of Volkswagen and Toyota (about 10.6 million each).
The idea was to reach a critical size to finance without problem the technological breakthroughs that are disrupting the automotive industry: electrification, autonomous and connected vehicles.