Fiat Chrysler Automobiles and Renault are seeking ways to revive merger talks after FCA abruptly withdrew their proposed $35 billion merger with the French automaker.
According to Reuters reviving the talks will depend upon gaining the support of Renault’s alliance partner Nissan Motors, which did not happen during the initial proposal. Renault currently has a 43 percent stake in Nissan, while Nissan has a 15 percent stake in Renault.
The alliance between the two automakers has become strained in recent months, with the alliance Chairman Carlos Ghosn arrested in Japan for financial misconduct. Nissan also feels the alliance is unbalanced as it is the larger of the two automakers, yet Renault owns a substantially larger stake in it.
Sources familiar with the merger talks say Nissan was unwilling to get on-board because the merger would create an unknown partner who owns 43 percent of its shares with voting rights.
FCA Chairman John Elkann abruptly withdrew his $35 billion merger offer on June 6th after the French government blocked a vote by the Renault board and demanded more time to win over Nissan. Subsequently, FCA publicly blamed the French government for the merger’s failure.
Since the breakdown, Elkann and his Renault counterpart Jean-Dominique Senard have had talks about reviving the plan. A trusted advisor of Elkann is reportedly visiting Nissan in Japan this week to discuss possibilities of getting the Japanese automaker’s blessing for the combination. Reportedly the talks are centered around Renault reducing its stake in Nissan prior the merger.
What isn’t entirely understood at this time is if the French government will support Renault reducing its 43 percent stake in Nissan. That said, the French have said they would be willing to reduce their own 15 percent stake in Renault if it could get the deal completed.
FCA may be hesitant to go along with a significant reduction of Renault’s stake in Nissan. The company’s hefty stake is part of the intrinsic value of Renault.
As of today all parties are declining to comment publicly on the status of the merger talks, with the French government simply stating, “The merger is gone.”