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FCA-Renault deal moving forward

by David Zatz on

The board of directors of Renault are meeting today to discuss merging into a new company with FCA and possibly Nissan, according to a recent article by Reuters.

Some at Nissan strongly oppose the deal, desiring to ally with Mitsubishi but end their partnership with Renault (which involves a good deal of mutual stock ownership); however, a purely FCA-Renault deal is apparently the first step regardless. (Renault and FCA both want to preserve their alliance with Nissan. Nissan’s CEO seems to want “out” of the relationship with Fiat but said FCA could bring new opportunities and might change his mind.)

Renault Alliance (1985)

Like Fiat and Chrysler, FCA and Renault largely occupy different spaces in the market.

The French government had thrown a wrench into the works briefly, demanding the right to approve the CEO and a guaranteed seat on the new board. FCA chair John Elkann, a member of the family that controls FCA, expressed his willingness to drop the deal and conducted some late negotiations with the French government; as a result, France is reportedly willing to have one of Renault’s four seats and drop CEO veto rights. Instead, the CEO nominating committee would consist of two FCA reps, one Renault rep, and one France rep.

Some have expressed concern about France holding a seat while the United States and Italy do not; but France holds 15% of Renault stock, with double voting rights. The United States and Italy do not hold any meaningful share of FCA stock. France’s right to representation comes from its position as a major stockholder, rather than as a government.

A deal is likely to be announced this week.

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