Merger plans with Fiat Chrysler: Renault adjourned

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Renault

The French government is setting several conditions for a merger of the car maker with Fiat Chrysler.


(Photo: Reuters)

ParisRenault's Board of Directors has not made any decisions on a merger with Fiat Chrysler (FCA) on Tuesday. "The Council has decided to keep the merger under consideration and to continue the discussion on Wednesday," it said following the meeting.

Nissan boss Hiroto Saikawa said on Tuesday that a merger of Renault with FCA would fundamentally change the basis of the alliance Nissan-Renault. Nissan would then have to review all of his contractual commitments to Renault. At the same time, he acknowledged that there could be new opportunities for synergies.

FCA had made Renault the offer for a merger several weeks ago. The talks became known at the end of May. After Renault had informed the French government, the manufacturer's board of directors confirmed its interest in "a 50 to 50 merger with FCA" on May 27.

The merger would create a company with a market capitalization of more than 30 billion euros, which would sell 8.7 million vehicles, making it the world's number three.

The French government has several conditions. In any case, she wants to send a representative to the board of directors of the merged company. The operational leadership should remain in Paris and there should be guarantees for the existence of factories and jobs in France.

Problems could still pose the different capitalization of the two companies. The Renault share has suffered more in recent months than that of FCA, which is why Renault considers the valuation with the current prices unfair. The Italian side does not want to give in at this point.

The Italian factories are less busy than Renault's and are less productive. Therefore, Fiat may run the risk of becoming the victim of future cuts. But in terms of competence, Fiat's interest in the merger is greater: Renault is much farther with e-mobility than Fiat. The Renault Zoé and the Nissan Leaf are world market leaders.

FCA is struggling to meet future stringent European standards for CO2 emissions. Although the purchase of Tesla's emission rights creates a breathing space, it does not solve the technical problems. Renault also has the broader base in manufacturing through joint platforms and purchasing with Nissan.

The French could gain access to the US market through the merger, but they would not sell their own cars. The US Ram, Jeep and Dodge models from Fiat Chrysler are very profitable in the United States, but not cars with a great future due to their huge fuel consumption.

More: The Fiat scion John Elkann is considered the architect of the planned merger of Fiat Chrysler with Renault. For the 43-year-old, it would be his masterpiece.

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