FCA-Renault merger talks collapse

6 June 2019

The proposed merger between Fiat Chrysler Automobiles (FCA) and Renault—a deal that would have created the world’s third-largest car maker—has collapsed.

The Board of Fiat Chrysler Automobiles N.V. said in a statement it “has resolved to withdraw with immediate effect its merger proposal made to Groupe Renault”, as it has become clear that “the political conditions in France do not currently exist for such a combination to proceed successfully”.

Groupe Renault expressed its “disappointment not to have the opportunity to continue to pursue the proposal of FCA”.

Speculations abound in the media as to the reason(s) behind the merger collapse. One possibility is the Nissan factor—French finance minister Bruno Le Maire said the government had not been prepared to back a deal without the endorsement of Renault’s alliance partner Nissan. The French government owns a 15% stake in Renault, while Renault owns 43% of Nissan.

Another consideration might have been the French government’s desire to protect jobs at Renault, a potentially sensitive issue in a country afflicted by the Gilets jaunes social unrest. The FCA-Renault merger talks occurred against the backdrop of a French public outcry over 1,044 layoffs by General Electric at its Alstom operations. GE had promised to safeguard Alstom jobs when it acquired the French rail transport manufacturer in 2015.

Source: FCA | Renault | Reuters