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What happened to FCA/Renault and what's next for FCA?

Eric D. Lawrence, Detroit Free Press on

Published in Automotive News

Fiat Chrysler Automobiles and French automaker Renault saw their effort at a merger collapse Wednesday (Thursday in Paris) about a week and a half after it was announced May 27.

That's like being left at the altar after eloping. Even though the marriage appears to be off, the reasons that led to talks in the first place haven't changed, so there could be more news to come.

What's next for FCA?

That depends on whether this was really the end of talks. Renault said it was delaying a vote after two days of board discussion on the proposal from FCA for a 50-50 merger. FCA almost immediately announced it was withdrawing the offer.

Michelle Krebs, executive analyst at Cox Automotive's Autotrader, was skeptical. "I find it hard to believe that FCA and (FCA Chairman John) Elkann, in particular, hadn't read the political tea leaves before, so I wonder if that is really the full story and is it something that can be overcome," she said.

Erik Gordon, law professor at the University of Michigan's Ross School of Business, said he wouldn't be surprised if they try again, suggesting it could be a negotiating ploy. Elkann in a letter to employees, however, said it had become clear discussions had been taken as far as they could reasonably go.

 

Why did the talks fall apart?

The specifics might not be immediately clear, with both FCA and Renault thanking various parties after the fact.

FCA pointed to "political conditions" in France. The French government has an ownership stake in Renault and obviously wanted to maintain a significant say in the new entity.

French and Italian politicians and labor unions also wanted job guarantees and might not have been satisfied by FCA's assurance that the deal would not require plant closures.

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