FCA withdraws merger proposal to Renault, cites ‘political conditions in France’ as a vexing issue

The big buzz about the Fiat Chrysler Automobiles' proposed merger with the Renault Group has turned into a whimper with FCA withdrawing the proposal.

Yesterday, late evening, the Board of Fiat Chrysler Automobiles met under the chairmanship of John Elkann and resolved to withdraw with immediate effect its merger proposal made to Groupe Renault.

In its statement, the company said: “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.”

FCA had claimed that combined annual revenues from the merger would be around £150 billion (around Rs 1,31,00,00 crore), with an operating profit of more than £8.8 billion (around Rs 77,000 crore) a year. The combined output would be around 8.7 million cars a year.

In its statement withdrawing the offer, FCA said that it "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."

FCA offered its thanks to Renault, along with the French firm's Alliance partners Nissan and Mitsubishi, for their "constructive engagement" over the proposal.

Renault expresses disappointment
Groupe Renault expressed its disappointment at not having the opportunity to continue to pursue the proposal of FCA (Fiat Chrysler Automobiles). In a statement, the company said: "We are gratified by the constructive approach of Nissan and wish to thank FCA for their efforts and the Renault’s Board of Directors for its continued confidence. 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 emphasises the attractivess of Renault and of the Alliance."

Analysts had broadly welcomed the possibility of the tie-up between the two firms, with FCA's strength in North America, through its Jeep and Ram brands, giving Renault an opening in that market, and FCA benefitting from Renault and Nissan’s experience with electrified cars, where it is lagging.

FCA also includes the Fiat, Alfa Romeo and Maserati brands. It is not clear if the offer withdrawal spells the end of the potential alliance, or if FCA will talk to other partners instead.

Previously, FCA is also understood to have also held talks with the PSA Group, which comprises Peugeot, DS, Citroen and Vauxhall/Opel, over a partnership. PSA boss Carlos Tavares is known to be keen about growing his firm, with acquisitions or partnerships, and has been strongly linked to a deal with Jaguar Land Rover.

FCA boss Mike Manley is also known to be keen on a partnership, telling reporters at the Geneva motor show that he was open to cooperation with other car firms, “whether it’s partnerships, joint ventures or deeper levels of equity cooperation that makes sense for us and whoever that is.”
James Attwood (Autocar UK) 

Also read: Renault and Fiat Chrysler in 'advanced discussions' for tie-up