French wouldn't back merger without the support of auto maker's
partner Nissan
By Nick Kostov and Stacy Meichtry
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 6, 2019).
PARIS -- Fiat Chrysler Automobiles NV on Wednesday withdrew its
proposal to merge with Renault SA after the French government
balked at the deal because it lacked the support of Nissan Motor
Co., according to people familiar with the matter.
The French state, Renault's top shareholder, went into a
marathon board meeting Wednesday evening saying its prime condition
for approving the $40 billion merger was that the deal fit within
the framework of Renault's decadeslong alliance with Nissan, the
people said.
Nissan's two representatives on Renault's board planned to
abstain in the vote, the people said, raising doubts about Nissan's
commitment to preserving the alliance if the merger were to
proceed, the people said.
The state asked to delay a vote on the merger, prompting Fiat
Chrysler to withdraw its merger proposal, the people said.
Confirming its withdrawal, Fiat Chrysler said it remained
convinced of the "transformational rationale" of its proposal.
"However it has become clear that the political conditions in
France do not currently exist for such a combination to proceed
successfully," the company said.
"The French state has been intrusive in the extreme," said a
person close to Fiat Chrysler. "They have sought the final word on
every issue and this has created a situation of uncertainty that
finally became intolerable."
The Italian-American auto maker's merger proposal aimed to build
scale to cope with slowing sales and the rising cost of developing
electric vehicles and self-driving cars. The combined company, if
realized, would boast production of almost nine million passenger
cars and light trucks a year, placing it just behind Volkswagen AG
and Toyota Motor Co.
The negotiations represented a test of the European auto
industry's ability to overcome national economic rivalries and
establish a European champion, akin to Airbus SE in aviation.
Fiat Chrysler sent Renault directors a merger proposal on May 26
that called for the combined business to be 50%-owned by its
shareholders and 50% by Renault shareholders.
French and Italian officials signaled cautious support for the
deal when the proposal was made public last week. The French state,
which has two seats on Renault's board, had pushed Fiat Chrysler
for concessions in recent days.
Going into Wednesday's board meeting, Fiat Chrysler and the
French government had reached a tentative deal, according to a
French official. The auto maker was confident that its revised
proposal had met all of the French government's demands only to
discover "the goal posts had been moved," said the person close to
Fiat Chrysler.
With Nissan representatives prepared to abstain if Renault's
board took a vote, the French government asked for more time so
that Finance Minister Bruno Le Maire could use an upcoming visit to
Japan to press the case for a merger with the Japanese, according
to a French official.
Complicating the consummation of the deal was the two-decade
partnership between Renault and Nissan in which they, along with
Mitsubishi Motors Corp., share technology and vehicle parts.
Renault owns 43.4% of Nissan, while Nissan owns 15% of Renault.
People close to Fiat Chrysler and Renault said the merger to
succeed needed Nissan's buy-in, in part because the Japanese
company co-owns some of the intellectual property that underpins
the alliance.
Over the years the alliance served both companies well. But
long-simmering tensions between the partners erupted late last year
following arrest in Japan of Carlos Ghosn, the auto titan who was
once the glue that held the alliance together.
Jean-Dominique Senard, who replaced Mr. Ghosn as chairman of
Renault, fueled mistrust at Nissan by keeping the Japanese auto
maker in the dark about the merger talks before they were publicly
disclosed, according to people familiar with the matter.
Mr. Senard, who was in line to lead the combined company,
emailed Nissan Chief Executive Hiroto Saikawa about the proposal
hours before it was made public, the people said.
"The idea you would negotiate a merger without speaking with
your 20-year partner is absolutely extraordinary," a person close
to Nissan said. "It's about trust, and that's the problem
here."
After that Renault had updated Nissan on the talks but the
Japanese company didn't have a seat at the negotiating table,
people familiar with the negotiations said.
People close to Renault and Nissan say a merger with Fiat
Chrysler would have forced the companies to renegotiate a thicket
of contracts that determine how the partners share everything from
vehicle platforms to engines.
Mr. Saikawa on Monday said that the proposed merger if realized
would significantly alter the structure of Renault.
"This would require a fundamental review of the existing
relationship between Nissan and Renault," he said.
Write to Nick Kostov at Nick.Kostov@wsj.com and Stacy Meichtry
at stacy.meichtry@wsj.com
(END) Dow Jones Newswires
June 06, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Fiat Chrysler Automobile... (NYSE:FCAU)
Historical Stock Chart
Von Feb 2024 bis Mär 2024
Fiat Chrysler Automobile... (NYSE:FCAU)
Historical Stock Chart
Von Mär 2023 bis Mär 2024