FCA Pulls Out Its Proposal To Merge With Groupe Renault
A collaboration that would create the 3rd largest global OEM with 8.7m vehicle sales and a strong market presence in key regions and vehicle segments, has met with a roadblock.
The Board of Fiat Chrysler Automobiles under the Chairmanship of John Elkann has resolved to withdraw with immediate effect its merger proposal made to Groupe Renault.
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. However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.
Media Reports say FCA's decision to withdraw the merger proposal was triggered by the repeated efforts by the French government, Renault's largest shareholder, to enlarge its say. Its demands included that Renault would be assured top positions in the merged entity, including the CEO post, and that the French government would be given one or more seats on the board.
The French government, which owns a 15% stake in Renault, was said to be pushing for a stronger voice in the merged entity.
"The broad welcome (the proposal) received was clear evidence that our timing, as well as the balance of what we were proposing, was correct," FCA Chairman John Elkann said. "The decision to terminate our discussions was not taken lightly but it was done so with one thing above all in mind; the protection of the interests of our company and all those working here and more widely with our broader stakeholders clearly considered."
FCA expressed its sincere thanks to Groupe Renault, in particular to its Chairman and its Chief Executive Officer, and also to the Alliance partners at Nissan Motor Company and Mitsubishi Motors Corporation, for their constructive engagement on all aspects of FCA’s proposal.
On this regard, Renault also issued a statement on Thursday, remarking its "disappointment not to have the opportunity to continue" pursuing FCA's proposal. It thanked FCA for its efforts and referenced the "constructive approach" of Nissan, which is in an alliance with Renault and Mitsubishi and had indicated some uncertainty about a full FCA-Renault merger.
"We view the opportunity as timely, having compelling industrial logic and great financial merit, and which would result in a European based global auto powerhouse. Further, we believe it (emphasizes) the (attractiveness) of Renault and of the Alliance," Renault said in the statement.
