FCA-Renault Merger Falls Through

Fiat Chrysler Automobiles (FCA) confirmed that it has withdrawn its proposal for a merger with French automaker, Renault, worth €33 billion. This puts a stop on what could have been the world’s third-largest carmaker.

Renault shares dropped 7 percent after FCA announced that it is pulling out from the planned merger because “political conditions in France do not currently exist for such a combination to proceed successfully.” FCA’s shares, meanwhile, slid 3 percent in Milan.

The decision was made after Renault’s board pushed back a decision on whether to engage with the all-stock proposal a second time. It said that the French government requested the delay, being the company’s largest shareholder with a 15 percent stake.

Renault said it “was unable to take a decision because of the request expressed by the representatives of the French state to postpone the vote to a later council.”

France’s finance ministry, meanwhile, said the deal lacked “explicit support from Nissan”.
Less than an hour after the Renault revealed the outcome of its board meeting, FCA expressed its intention to withdraw the merger proposal.

Shares in Nissan, the second-biggest shareholder in Renault, fell by 3.6 percent in early trading in Tokyo but bounced back to 1.3 percent by early afternoon.

The merger would have seen the two European carmakers own 50 percent each of the combined business for total sales of 8.7 million vehicles a year – larger than General Motors and third-biggest automakers Volkswagen and Toyota.

According to reports, the French state and a union representative were revealed to be the only Renault board members who did not vote for the deal, while Nissan representatives abstained.

Nissan reps said they were not “hugely surprised” by FCA’s decision. The Japanese company has had a working partnership with Renault for 19 years. The French government, on the other hand, said they were surprised by the speed of FCA’s decision to withdraw its proposal when it had only asked for the decision to be delayed by roughly a week.