Mega Renault-Fiat merger postponed: connection, but on French terms?
Everything seems to indicate that one of the largest mergers in the automotive market in recent years – the merger of Renault and Fiat Chrysler, will not be easy and pleasant. The media reports that on the one hand it was blocked by the French government, on the other – the Italian-American company withdrew the offer. Investors immediately reacted to the news – the shares of both companies went down.
The management of the Renault concern postponed the decision on the merger with the Italian-American automotive group Fiat Chrysler (FCA) on Wednesday at the request of representatives of the French authorities present on the Board of Directors. Sources close to the FCA said in turn that Fiat Chrysler withdrew its offer.
This would mean that the offer submitted on May 27 this year by the FCE group to the Renault corporation, which could result in a partnership on equal rights (50/50), is no longer valid.
Just to remind, on 27 May, Fiat Chrysler proposed Renault partnership on equal terms. Experts, questioned by Reuters, assessed that the merger would spatter the market – could threaten the position of such giants as General Motors or the PSA Group (Peugeot Société Anonyme) and result in modern technological solutions and changes in the field of legal regulations.
Reuters reports that FCA would gain access to top-class Renault electric drive technology, and the French company would gain the lucrative Jeep and RAM FCA brands.
FCA has been looking for a partner for the merger for a long time, and it has previously had unsuccessful talks with the producer of the Peugeot PSA Group, in which the French state also owns shares.
According to Reuters, the decision to end talks could also contribute to the further tightening of relations between Renault and Nissan, already strained by the arrest and overthrow of the president of the alliance, Carlos Ghosn, who is currently facing a trial in Japan on accusations of improper financial behavior.
Currently, Renault has a dominant position over Nissan, controlling 43.4 percent of its shares (with the right to vote). On the other hand, 34 percent belong to Nissan. Mitsubishi and 15 percent. Renault shares (without voting rights).
The potential value of the merged corporations was to reach approximately 37 billion dollars, and the annual production of approx. 9 million passenger cars and light commercial vehicles. Thus, in terms of production, the new entity would be in third place, behind Volkswagen and Toyota. Additionally, according to FCA, the merger would bring annual savings of 5.6 billion dollars.