Italian-American car manufacturer Fiat Chrysler (FCA) has withdrawn its merger proposition with Renault, after the French government imposed new conditions on the deal. The offer, which FCA president John Elkann had stressed was ‘take it or leave it’, had been discussed by the Renault hierarchy in Paris the night before it was withdrawn.
That meeting ended with Renault announcing they were postponing their decision for five days, in order to allow the main shareholders, including Nissan and the French government, more time to discuss the merits of the tie up. Time they were not to get, as during the night of the June 5th and 6th, only 20 minutes after announcing their decision to put back their vote Renault’s top brass saw their plans turn to dust. How did this happen?
Nissan – the key player
Japanese car company Nissan, which owns a 15% stake in Renault, was not party to the initial merger discussions. The French government insisted that they be given the chance to sign off on the deal before it went through. Nissan, lukewarm about the prospect of a merger, sought to stall for time. The two Nissan representatives present during the long evening of negotiations at Renault HQ abstained from voting, which showed a majority in favor of the merger. Renault president Jean-Dominique Sénard, who had moved heaven and earth in order to push the merger through, decided, in the end, not to pursue the deal any further. The one small consolation for Sénard; a press release issued by Renault which stated that the board of directors “was not in a position to make a decision due to the insistence of representatives of the French government that the vote be postponed.” Nevertheless, it will not be so easy for the president of Renault not to carry the can for this setback. Shares in the car company fell 8% the day after Fiat withdrew its merger proposal.