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FCA withdraws merger offer as Renault board postpones decision

Eric D. Lawrence, Detroit Free Press on

Published in Automotive News

DETROIT -- The Renault/Fiat Chrysler Automobiles merger effort appears to be dead, or at least on hold.

The board of the French automaker, after an apparently marathon-length meeting Wednesday in Paris, announced that it was postponing a vote on the proposal based on a request from the French government. FCA, for its part, said it was withdrawing its offer.

"The Board of Directors was unable to take a decision due to the request expressed by the representatives of the French State to postpone the vote to a later Council," according to a Renault statement.

FCA countered by saying it is withdrawing the offer because of "political conditions in France."

"FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been carefully balanced to deliver substantial benefits to all parties. However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully," according to an FCA statement.

FCA thanked Renault's Chairman Jean-Dominique Senard and CEO Thierry Bollore as well as the company's alliance partners Nissan and Mitsubishi for their "constructive engagement." The company also pledged to deliver on its commitments through its "independent strategy."

 

Wednesday had marked the second day of meetings for the Renault board, which released its statement early Thursday morning Paris time.

An affirmative decision would have paved the way for the two automakers to begin exploring the details of what a merged company would look like. It would not have represented a final vote on the merger, which could have taken more than a year to complete.

FCA proposed a 50-50 merger with Renault on May 27, saying it would create the world's third-largest automaker and save $5.6 billion annually.

Concerns about maintaining a voice in the new entity from the French government, which owns a 15% stake in Renault, were said to be at issue, but Reuters reported Tuesday that a resolution had been reached. Tensions with Nissan had also flared, with that company's CEO Hiroto Saikawa saying Monday that a full FCA-Renault merger "would require a fundamental review" of the Nissan-Renault relationship.

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