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Fiat Chrysler Withdraws Its Offer for Renault Fiat Chrysler Withdraws Its Offer for Renault
(32 minutes later)
Fiat Chrysler late Wednesday abruptly withdrew a proposal to merge with Renault, walking away from a deal that had the potential to change the balance of power in the global auto industry. Fiat Chrysler late Wednesday abruptly withdrew a proposal to merge with Renault, walking away from a deal that could have fundamentally reshaped the global auto industry.
The stunning move came after two days of meetings at Renault’s headquarters in Paris in which its chairman, Jean-Dominique Senard, had sought to convince its board of the financial and industrial merits of a deal. The stunning move came after two days of meetings in Paris in which Renault’s chairman, Jean-Dominique Senard, had sought to convince its board of the financial and industrial merits of a deal.
In a statement Wednesday evening, Fiat Chrysler said it continued to believe that the merger proposal was solid and “carefully balanced to deliver substantial benefits to all parties.” But it added, “It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.” In a statement Wednesday evening, Fiat Chrysler said it continued to believe that the merger proposal was solid, balanced and beneficial to all parties. But it added, “It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
Since Fiat Chrysler officially unveiled its proposal on May 26, the plan has faced resistance by some Renault shareholders who argued that the Italian-American conglomerate was undervaluing a crown jewel of French industry. France’s powerful labor union at Renault objected to a deal, warning that a combined entity could lead to layoffs. Since Fiat Chrysler officially unveiled its proposal on May 26, the plan has faced resistance by some Renault shareholders who argued that the Italian-American conglomerate was undervaluing a crown jewel of French industry. France’s powerful labor union at Renault objected to a deal, warning that it could lead to layoffs.
The negotiations were also complicated by Renault’s long-term alliance with Nissan. In a statement Monday, Nissan’s chief executive, Hiroto Saikawa, said a full merger with Fiat “would significantly alter the structure of our partner Renault,” and added, “This will require a fundamental review of the existing relationship between Nissan and Renault.” The negotiations were also complicated by Renault’s longtime alliance with Nissan. In a statement Monday, Nissan’s chief executive, Hiroto Saikawa, said a full merger with Fiat “would significantly alter the structure of our partner Renault.” He added, “This will require a fundamental review of the existing relationship between Nissan and Renault.”
The withdrawal came after the French government said earlier Wednesday that it would not approve a deal unless Nissan, with which Renault has had a formal alliance for 20 years, backed the offer. Nissan said it had no comment on the merger’s collapse.
In a statement posted to its website on Wednesday, Renault said it was unable to make a decision because representatives of the French government, which has a seat on the board, requested to postpone the vote. Earlier on Wednesday, the French government said it would not approve a deal unless Nissan, with which Renault has had a formal alliance for 20 years, backed the offer.
In a statement posted to its website on Wednesday, Renault said it was unable to make a decision because representatives of the French government, which has a seat on the board, had asked to postpone the vote.
A person with knowledge of the situation said the government had repeatedly asked to postpone a final decision, leaving Fiat to conclude that the two sides were not getting anywhere — despite eagerness by Mr. Senard and Renault’s principal leadership to strike a deal.A person with knowledge of the situation said the government had repeatedly asked to postpone a final decision, leaving Fiat to conclude that the two sides were not getting anywhere — despite eagerness by Mr. Senard and Renault’s principal leadership to strike a deal.
John Elkann, the Fiat Chrysler chairman, held a whirlwind of meetings with French government officials in Paris over the weekend, promising that a deal wouldn’t lead to factory closures. The issue is politically sensitive for President Emmanuel Macron at a time when foreign companies including General Electric, Whirlpool and Ford are cutting thousands of jobs in France.John Elkann, the Fiat Chrysler chairman, held a whirlwind of meetings with French government officials in Paris over the weekend, promising that a deal wouldn’t lead to factory closures. The issue is politically sensitive for President Emmanuel Macron at a time when foreign companies including General Electric, Whirlpool and Ford are cutting thousands of jobs in France.
A person briefed on Fiat Chrysler’s reasons for withdrawing said the company’s negotiators felt hemmed in by some of the French government’s demands, including commitments on maintaining employment levels.
With combined output of 8.7 million vehicles a year, from Ram pickup trucks to tiny Renault Clios, a combination of Fiat Chrysler and Renault would have displaced General Motors as the world’s third-largest car company, behind Volkswagen and Toyota.
The overture from Fiat Chrysler underscored the urgency faced by global automakers to share the costs of a pivotal industrial transition from internal-combustion engines to electric vehicles and self-driving cars. It would have put pressure on rivals to find partners or be left behind at a time when new challengers like Tesla and Uber are emerging.
Among the hurdles in the talks were concerns raised by the CIAM fund, which owns about 50 million euros’ worth of Renault shares. In a letter to the board Tuesday, the group questioned Fiat Chrysler’s motives in announcing a deal at a time when Renault’s stock price is at a historic low of around €55. Renault shares have fallen about 15 percent since Carlos Ghosn, the former chairman of Renault and Nissan, was arrested in Japan in November on charges of financial wrongdoing.
Under Fiat’s proposal, shareholders of Fiat Chrysler would have shared a dividend of €2.5 billion, or $2.8 billion, that reflects the company’s higher value on the stock market. But CIAM argued that Fiat stood to profit so much more than Renault that it should be paying the French automaker’s shareholders that amount — and more.
“We will strongly oppose this opportunistic takeover that not only undervalues Renault, but also offers no control premium if the price remains as planned,” the letter said.