A proposed merger between Fiat Chrysler-Renault, which would have created the third largest global automaker, is off. Fiat Chrysler Automobiles withdrew its offer, The Wall Street Journal reported.
FCA confirmed to TechCrunch that it has withdrawn its offer, largely due to political conditions.
“FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties,” according to a company statement provided to TechCrunch. “However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
FCA delivered May 27 a non-binding letter to Renault’s board that proposed combining the business as a 50-50 merger. FCA’s proposal illustrated the growing desire among automakers to consolidate, or form partnerships, in an environment of increasing regulatory pressure, declining sales and rising costs associated with next-generation technologies such as autonomous vehicle technology. Earlier Wednesday, BMW and Jaguar announced a collaboration on developing next-generation electric vehicle components.
Under the proposal, the combined businesses would have been split equally between FCA and Renault shareholders. The board would be a combined entity of 11 members, FCA said. The majority would be independent. FCA and Renault would get equal represent with four members each.
The WSJ reported that Nissan Motor, French automaker Renault’s existing partner, was the primary sticking point in the merger. Renault has an alliance with Nissan Motor. Under that alliance, Renault owns 43.4% of Nissan. Nissan owns 15% of Renault.
The relationship between Renault and Nissan Motor has become stressed in the fallout over the arrest of former Renault-Nissan Alliance CEO Carlos Ghosn and subsequent power struggle, share vehicle parts and collaborate on technology.
This is a developing story.
