Fiat Chrysler has abandoned its $35bn merger offer for Renault and blamed French politics for scuttling what would have been a landmark deal, Reuters has reported. If the deal had gone through, it would have created the world’s third-largest car manufacturer.
Fiat Chrysler chose to pull out after France sought to delay a decision in order to win the support of Renault alliance partner Nissan Motor Company. While the French wanted Nissan to support the merger, the Japanese firm said it would abstain. The French government owns a 15 per cent stake in Renault. It pushed Fiat Chrysler for guarantees that France would not lose jobs and for a dividend to be paid to Renault shareholders, including the government. Fiat Chrysler’s proposal had offered no special dividend to Renault shareholders.
“It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” Fiat Chrysler said in a statement on Thursday. Renault, in a statement, said its board 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 meeting”.
A merger would have cut operating costs and investments by over EUR5bn a year. Fiat Chrysler stood to gain access to Renault’s superior electric drive technology to meet mandates for zero-emission cars. Renault would have had a share of the Italian-American company’s lucrative Jeep sport utility vehicle and RAM pickup truck franchises.
The sudden end to the merger talks came after midnight in Paris after Fiat Chrysler and French government officials had reached a tentative agreement that cleared the way for Renault’s board to consider moving forward.