By on June 6, 2019

Dodge Challenger SRT Demon

Following a whirlwind 10-day courtship, Fiat Chrysler withdrew its marriage proposal to Groupe Renault on Wednesday night, citing irreconcilable differences.

FCA blames France.

The proposed 50:50 merger with the French automaker, floated on Memorial Day, was snatched off the table following an FCA board meeting, the automaker stated in a release, adding that it had “become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Renault’s board was expected to make a decision on Tuesday as to whether to reject the proposal or move into merger talks. That decision was postponed after the French government, which holds a 15 percent stake in Renault — and would see its influence shrink by half in a merger — pressured Renault to delay.

Last week, France reportedly asked FCA for certain assurances to earn its approval, including guarantees of a Paris headquarters for the new entity, the retention of all French workers for a four-year span, and a seat at the boardroom table. These guarantees, cited by sources close to the negotiations, were not confirmed.

FCA believed the new entity emerging from the union would enjoy numerous benefits with regard to platform and technology sharing, with both sides standing to save a combined $5.6 billion through shared development costs and purchasing. FCA Chairman John Elkann even offered a hand to Renault’s nervous alliance partners, Nissan and Mitsubishi.

Besides blaming France, the American automaker’s public statement contains a whiff of “you’ll miss us when we’re gone”-style hard bargaining tactics.

“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.

In a statement issued Thursday morning, Groupe Renault expressed its “disappointment not to have the opportunity to continue to pursue the proposal,” calling the offer “timely” and “compelling.”

According to media reports, Nissan said it would not vote on the proposed merger, leaving the French government — which hoped to keep the existing alliance intact (and happy) — with cold feet. A struggling Nissan, like France, would see its influence watered down in such a merger.  reports French finance minister Bruno Le Maire said his government would not approve a merger without the endorsement of Nissan.

However, a source close to FCA claims the Nissan angle is a cover, suggesting French President Emmanuel Macron was seeking a way out of the deal after facing blowback from citizens.

[Image: Fiat Chrysler Automobiles]

Recommended

20 Comments on “Fiat Chrysler Loses the Urge to Merge, Withdraws Proposal to Renault...”


  • avatar
    cdotson

    This episode buttresses my position that the shenanigans surrounding Carlos Ghosn was fallout of a boardroom war between Japan and France, each attempting to increase their influence in the “alliance.”

    This is the divorce of the Nissan-Renault alliance. FCA was the hot new thang the couple tried to bring into the mix to spice up the relationship. It’ll be their undoing.

    FCA should make offers to Nissan to merge if they kick France out. They should also make an offer to PSA just to anger Renault. Neither offer has to be serious, but it’d be funny.

  • avatar
    87 Morgan

    Can’t say that I am all that surprised, perhaps the merger offer is too soon following the Ghosn debacle. It would have been quite a feat to get cooperation from the Japanese, French, Italians, & Americans in putting this deal together.

  • avatar
    rpol35

    As I mentioned in a post yesterday, France’s involvement would have been a deal killer for me. FCA made the right decision to walk away.

    • 0 avatar
      Steve203

      Is this where I say “told you so”?

      The day the story of the merger proposal broke, I said this makes no sense to even talk about. Because of Nissan’s market share in the US, combining that with FCA’s share would never pass US anti-trust scrutiny. Second, if Renault divested Nissan, to clear US anti-trust scrutiny, Renault would lose more by selling it’s interest in Nissan than it gained with FCA. This entire rhubarb was a foolish waste of time from the start.

      All we “know” about the negotiations is spin from “unnamed sources familiar with the situation”.

      FCA is blaming the French government for the collapse of talks. FCA said going in there would be no layoffs and no plant closings. Reportedly, the French government said “put that in writing wrt French workers and factories”. This demand would only be a problem if FCA was lying.

      With tongue firmly in cheek, I have suggested in other forums that Manley has been reading my posts about the anti-trust vs divestiture issues and said “By jove (Manley is a Brit) this Steve guy is right. We better spike this deal quick, before everyone else figures it out and I look foolish for wasting everyone’s time”.

      The more sinister vector of this episode is that, the day after the merger was announced, and FCA stock popped about 8%, Manley sold about $3.5M worth of FCA stock. Then, a week later, Manley pulls the plug on the merger that had made the stock pop, which he had personally profited from. The stock sale may have been perfectly innocent, but the optics are horrible. There may well be an SEC investigation in the offing for Manley perpetrating a “pump and dump” scheme, and maybe a criminal fraud investigation. Again, Manley’s stock sale may have been perfectly innocent, but the sequence of Manley floating the merger, making the stock pop, selling stock, then dropping the merger, all within little more than one week, reeks.

  • avatar
    Lie2me

    So, never mind

    The whole deal seemed WAY too complicated to happen, no surprise

  • avatar
    Jeff S

    This is the right decision. Better that FCA merge with another company if they are looking for a merger. Hyundai/Kia might be a better fit. Better not to merge than to merge with the wrong partner and not repeat the Daimler merger.

  • avatar
    conundrum

    “Besides blaming France, the American automaker’s public statement”.

    Where you been this past decade, Mr Willems? FCA is not American. It’s Italian, head-quartered in the Netherlands and registered in the UK for various reasons, like all major US corporations being HQ’ed in Delaware where checking up on companies is not a part of the deal for collecting annual registration fees and chortling away at free money.

    Marchionne was always about making money for the Agnelli family, so they put Elkann as a member of the family as chief Chief of FCA to keep an eye on Sergio. Elkann’s still there pulling Manley’s puppet strings.

    My guess now they’ve been rebuffed is to wind down European production, having already sold off Magneti-Marelli for $6 billion or so, then float RAM and Jeep as an IPO to American investors. Another $15 or $20 billion in the bank, and then the Agnellis never have to wonder if there’s money for that weekend getaway and a bottle of decent plonk to wash it all down with.

  • avatar
    ToddAtlasF1

    There are no bad reasons why this merger was called off, but I wouldn’t be surprised if it was as simple as FCA realizing what Renault would learn about their structural issues if they performed due diligence prior to making a decision.

  • avatar
    phxmotor

    As China passes the 115 mark for the number of auto manufacturers… the west keeps consolidating… and reducing the number of competitors. We all know where this is leading.

  • avatar
    phxmotor

    As China passes the 115 mark for the number of auto manufacturers… the west keeps consolidating… and reducing the number of competitors. We all know where this is leading.

  • avatar
    FreedMike

    So FCA had dirty dealings that the American government investigating, which Renault no doubt had issues with, Renault had issues with the French government that FCA had issues with, and Nissan wants no part of any of this mess.

    What could have possibly gone wrong here?

    • 0 avatar
      Steve203

      “So FCA had dirty dealings that the American government investigating,”

      Marchionne’s antics also attracted SEC scrutiny, from repeatedly floating rumors of FCA being bought out to inflating sales numbers.

  • avatar
    Steve203

    Is this where I say “told you so”?

    The day the story of the merger proposal broke, I said this makes no sense to even talk about. Because of Nissan’s market share in the US, combining that with FCA’s share would never pass US anti-trust scrutiny. Second, if Renault divested Nissan, to clear US anti-trust scrutiny, Renault would lose more by selling it’s interest in Nissan than it gained with FCA. This entire rhubarb was a foolish waste of time from the start.

    All we “know” about the negotiations is spin from “unnamed sources familiar with the situation”.

    FCA is blaming the French government for the collapse of talks. FCA said going in there would be no layoffs and no plant closings. Reportedly, the French government said “put that in writing wrt French workers and factories”. This demand would only be a problem if FCA was lying.

    With tongue firmly in cheek, I have suggested in other forums that Manley has been reading my posts about the anti-trust vs divestiture issues and said “By jove (Manley is a Brit) this Steve guy is right. We better spike this deal quick, before everyone else figures it out and I look foolish for wasting everyone’s time”.

    The more sinister vector of this episode is that, the day after the merger was announced, and FCA stock popped about 8%, Manley sold about $3.5M worth of FCA stock. Then, a week later, Manley pulls the plug on the merger that had made the stock pop, which he had personally profited from. The stock sale may have been perfectly innocent, but the optics are horrible. There may well be an SEC investigation in the offing for Manley perpetrating a “pump and dump” scheme, and maybe a criminal fraud investigation. Again, Manley’s stock sale may have been perfectly innocent, but the sequence of Manley floating the merger, making the stock pop, selling stock, then dropping the merger, all within little more than one week, reeks.

    • 0 avatar
      Steve203

      As opposed to spin from “unnamed sources familiar with the situation” that blame the French government, this is official:

      “A French official told reporters Thursday that all of its demands were met –- on valuation, governance, protecting jobs and industrial sites -– but France needed five more days to convince Nissan to support the deal. Nissan’s two representatives at Renault’s board were planning on abstaining.”

      So after the supposed “months of talks” between FCA and Renault, FCA couldn’t wait a few more days for the head of Renault to persuade Nissan to be entirely on board with the deal? This fiasco is starting to really stink.

      Here’s the link to the article.

      https://finance.yahoo.com/news/fiat-renault-talks-end-blame-091526345.html

    • 0 avatar
      WildcatMatt

      This all came and went quickly enough that something is a little off about it.
      It’s either stock shenanigans or else FCA is stirring the Renault/Nissan sh!tstorm for some as-yet unknown purpose.

      At the very least, given the way it was withdrawn FCA appears to have floated it with the expectation that it wouldn’t be taken seriously and had to retreat when it was.

      • 0 avatar
        Steve203

        “At the very least, given the way it was withdrawn FCA appears to have floated it with the expectation that it wouldn’t be taken seriously and had to retreat when it was.”

        That is an interesting take: nothing but another Marchionne pump job. Thing is, when Sergio did it, GM, VW or whoever else, immediately responded with a firm “NO”. Renault said “lessee, let’s talk about this”.

        FCA may have been reading the reports of Nissan chafing at Renault’s control and thought they could stick a wedge between the two and torque Nissan off enough to break off the Alliance, leaving Renault nekked without the scale it would need to survive in the industry and desperate to latch on to anyone. Instead of walking off in a huff, Nissan board members were going to abstain, and Renault thought Nissan could be brought around with a few more days stroking. FCA said “ack! that’s not what we want” and ran for the hills.

        How much is Mike Manley paid per year, to come up with a bush league plan like that?

        • 0 avatar
          Steve203

          Oh, this is interesting.

          Seems that the plan the investment bankers were working was, indeed, to drive a wedge between Nissan and Renault, and pick off Renault.

          From the article:

          “”They couldn’t navigate the complexity of this deal and their plan of sidelining Nissan backfired,” the first source said.

          French Finance Minister Bruno Le Maire demanded that, as one of the main conditions for talks to progress, the deal needed the backing of Nissan.

          “It was an ill-conceived deal from the start,” said a source close to Nissan. “FCA’s advisers thought they could corner Nissan and secure France’s approval in a couple of days. They clearly minimized the risks.””

          https://www.yahoo.com/finance/news/fca-renault-merger-collapse-blow-181732302.html

  • avatar
    Fred

    Ah those pesky citizens always messing with out ability to make money.

  • avatar
    rpol35

    BTW, love the image…”watch my taillights fade…..”

  • avatar
    stingray65

    Now we will never know the joy of owning a car with the styling the French are known for, the reliability that Italians are known for, the ride and handling that the Japanese are known for, and the brand killing rebates and money on the hood that the Americans are known for. It could have been a marriage made in heaven.


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • FerrariLaFerrariFace: And it will be the best handling, most fun to drive compact SUV under $100,000.
  • Adam Tonge: Twice in the same article? Don’t make it three.
  • Nick_515: Someone called this here. I think it was sportyaccordy,
  • SCE to AUX: @Lockstops: “Note how Toyota isn’t saying that electric vehicles are viable outside China. Or that...
  • Adam Tonge: Lets not advocate for the mass relocation of Americans that have a particular political belief. I mean,...

New Car Research

Staff

  • Contributors

  • Timothy Cain, Canada
  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States
  • Moderators

  • Adam Tonge, United States
  • Corey Lewis, United States