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FCA withdrawing from Renault deal

by David Zatz on

A linkup between Renault and FCA apparently wasn’t meant to be, perhaps of a reflection of the issues that led Nissan to “re-examine” its relationship with the French automaker.

Observers had noted that FCA and Renault have remarkably little product and geographical overlap, making the merger a potential boon to both.  Based on the wording of the release, the issue was within the French government, which owns 15% of Renault stock (but has voting power of 30%).

The Fiat Chrysler Automobiles board voted to withdraw its merger proposal tonight, issuing a statement that noted “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 expresses its sincere thanks to Groupe Renault, in particular to its Chairman and its Chief Executive Officer, and also to the Alliance partners at Nissan Motor Company and Mitsubishi Motors Corporation, for their constructive engagement on all aspects of FCA’s proposal.

“FCA will continue to deliver on its commitments through the implementation of its independent strategy.”

FCA had modified its proposal somewhat so that France could appoint its own board member, albeit at the expense of one of Renault’s. The French government may have desired more control over the CEO and merged company than the Agnelli family and FCA were willing to provide.

The two companies can still continue to work together where they already have alliances, and may expand their relationships in the absence of a formal merger.

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