- nine days after publishing its proposal for a 50/50 merger with renault, fiat chrysler has withdrawn its offer.
- the two automakers could have combined to become the third-largest automaker in the world.
- fca said "political conditions in france" caused the merger proposal to fall flat.
update 6/6/19: renault issued a statement today expressing "disappointment" about the withdrawal of the fca merger proposal. in the statement, renault confirmed reports that it had itself supported the plan. "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," the company said. "further, we believe it emphasizes the attractiveness of renault and of the alliance." officials in the french government, which holds 15 percent in renault, could not convince nissan to vote in support but said they hope talks with fca will resume later.
in yet another rejected attempt at a merger, fiat chrysler has withdrawn its offer for a proposed merger with renault just one week after initially submitting the proposal. according to the wall street journal, it wasn't renault who rejected the 50/50 arrangement, but nissan.
the wsj reports two renault board members representing nissan were against the deal just as the french government, according to a statement from renault earlier wednesday, asked the automaker to "postpone the vote." without nissan's support—which holds a 15-percent stake in renault, and likewise, renault a 43.3-percent stake in nissan—there would be no further discussion. the combined worth of both companies would have been $40 billion, the wsj said.
in a released statement, fca placed the blame on the french. "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," the company said. "however it has become clear that the political conditions in france do not currently exist for such a combination to proceed successfully."
fca published the surprise offer to renault on memorial day, promising more than $5.6 billion in annual cost savings if the two automakers tied the knot. at an estimated 8.7 million annual vehicle sales, fca and renault would have become the third-largest automaker in the world, with the distinct possibility that renault could reemerge into the u.s. market. the payout to fca investors would be a $2.8 billion dividend up front and a profitable italian-american-french company within two years, all without closing a single plant. fca now says it will continue operating with an "independent strategy."
fca's previous merger dreams with hyundai, volkswagen, gm, and anyone else listening have been in the background since 2015, if not earlier. fca reported a $695 million profit for the first quarter of this year and has otherwise remained healthy since sergio marchionne's push to expand truck production and his lucrative spinoff of ferrari. but fca's other brands, namely fiat, continue to sag in europe while its major u.s. cash cows, jeep and ram, make the majority of its profit. the company has also been achingly slow to invest in hybrids and evs—another major reason it wanted to piggyback off renault's expertise. now that this offer has expired, what will the next one look like?
this story originally published on june 5, 2019.