Fiat Chrysler Automobiles (FCA) has withdrawn its merger offer with Renault, not long after reaching a tentative agreement with France on the terms of the proposed offer.
Renault issued a statement that it had been reviewing the potential 50/50 merger “with interest” but was unable to reach a decision because representatives of the French State – which owns 15 per cent of Renault – had asked for the automaker’s vote to be postponed to a later meeting. This request followed two consecutive days of meetings by Renault’s board of directors.
In turn, FCA issued a statement saying that “it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
The American automaker thanked the heads of Renault, along with its Alliance partners Nissan and Mitsubishi. FCA proposed the merger with Renault on May 27. It would have created the world’s third-largest automaker, behind Volkswagen and Toyota, and was valued at US$35 billion.
The Wall Street Journal reported that FCA had pulled the merger offer after Nissan refused to support the deal. The paper also said it was Nissan’s stance that caused the French government to ask for postponement of the vote.
Reuters reported that Nissan’s CEO, Hiroto Saikawa, said that the FCA-Renault merger “would require a fundamental review” of his company’s relationship in the Renault-Nissan-Mitsubishi Alliance. The connection between Nissan and Renault has already been strained by the arrest of CEO Carlos Ghosn.
Prior to FCA’s withdrawal, the merger proposal was expected to pass without any issues, although concerns about job losses were raised by European governments. The United Auto Workers Union (UAW) said in a statement that, “As with any merger of companies, the UAW is first and foremost concerned how this will impact our members. FCA leadership has stated to us that this action will not result in any closure of our represented locations.”
Following the initial announcement of the proposal, Mike Manley, CEO of FCA, sold US$3.5 million worth of his FCA shares. In other news, U.S. sales chief Reid Bigland has sued the automaker in a “whistleblower” lawsuit, claiming the company punished him for speaking to the federal government about how it reported its sales.