FCA Withdraws Renault Merger Offer, Blames French Government for Stalling Deal
"It's clear that the political conditions in France do not currently exist for such a combination to proceed successfully," said FCA.
Less than two weeks after pursuing a $35 billion merger with French automaker Renault, Fiat Chrysler Automobiles (FCA) has withdrawn its offer and is walking away from the deal after the parties involved couldn't come to a mutual agreement at a meeting in Paris, France Wednesday night.
According to a statement released by FCA, the French government is to blame for the withdrawal, as the automaker believes French officials weren't readily prepared to make a decision within the time frame stated in the original merger documents. Furthermore, it's believed that the French government's 15 percent ownership of Renault complicated matters even more, as it was solely focused on Renault's valuation, shareholders, and labor relations rather than the alliance's as a whole.
"The Board of Fiat Chrysler Automobiles N.V. (“FCA”) (NYSE: FCAU / MTA: FCA), meeting this evening under the Chairmanship of John Elkann, has resolved to withdraw with immediate effect its merger proposal made to Groupe Renault," read an official company statement.
Fiat Chrysler Chairman John Elkann, a member of Italy's elite Agnelli family and a direct descendant of Gianni Agnelli, sought to defend the original terms proposed and went on to "iron out most differences with representatives of the French government, led by finance minister Bruno Le Maire," according to AN. However, issues regarding Renault's valuation lingered during the meeting.
Another big player in the merger, Nissan, has remained quiet during most of the deal and has gone as far as appearing distant and indifferent to the merger. According to AN, the French Government and Renault pushed Nissan to sponsor the merger during the meeting and even went as far as stopping negotiations three times to consult privately. In the end, Nissan board representatives abstained from voting when it came time to accept or reject the merger.
"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," said FCA in a statement.
Renault Chairman Jean-Dominique Senard and other French officials moved to request a delay in negotiations and voting, citing that "talks with his Japanese counterparts could be held over the weekend in Tokyo on Monday, after the G20 summit, and a vote could then take place on Tuesday," said AN.
As a result, FCA quickly disagreed to the request and this eventually led Elkann to withdraw its merger bid, prompting Renault and French officials to say that FCA seemed in too great of a hurry to lock down the deal, while the French didn't see the need to rush.
"However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully," stated FCA after the withdrawal.
It's unclear at this moment if further negotiations will happen, or if FCA will truly drop this and simply move on like nothing's happened.