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Fiat Chrysler Withdraws Merger Proposal With Renault

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Fiat Chrysler Withdraws Merger Proposal With Renault

Automaker Fiat Chrysler Automobiles NV (NYSE: FCAU) said Wednesday evening it has withdrawn its proposal to acquire European automaker Renault due to political concerns in France.

What Happened

Fiat Chrysler said in a press release its proposed merger of equals with Renault has been withdrawn with "immediate effect." The company continues to believe the proposal is "compelling" and would have been "widely appreciated." However, "political conditions in France do not currently exist" for the combination to proceed.

The French government is Renault's biggest shareholder with a stake of 15.1 percent. France's finance minister Bruno Le Maire said the government was able to reach agreements on three of the four most pressing conditions but failed to obtain the support of Renault's Japan-based partner, Nissan.

The three conditions all parties agreed to relate to keeping Renault jobs in France, ensuring a fair corporate governance structure, and a commitment to developing electric batteries with Germany.

France's government proposed delaying the merger vote and Renault said it's own directors "were unable to take a decision due to the request expressed by the representatives of the French State to postpone the vote to a later Council.

Why It's Important

France's government made attempts to lobby Nissan to support the merger but the Japanese company said it would abstain. Nevertheless, France's government remains in favor of the merger but Le Maire said "we should take our time" in reaching an agreement.

Fiat Chrysler said in its press release it will continue to "deliver on its commitments through the implementation of its independent strategy." Separately, Le Maire said Renault is in a good position within the auto sector to address new markets like electric vehicles and lowering emissions.

Fiat Chrysler's stock closed Wednesday at $13.19 per share and was marginally higher early Thursday morning.

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Posted-In: auto auto merger France RenaultM&A News Top Stories Media Best of Benzinga

 

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