The merger plan, which sought to create the world’s third-largest automaker, had been viewed positively across the industry since it was announced last week. Talks collapsed suddenly overnight, however, after the French government — Renault’s top stakeholder — asked for five more days to obtain support from Nissan, Renault’s long-time Japanese alliance partner.Fiat Chrysler cited “political conditions in France” for the withdrawal, but it thanked both alliance partners for “their constructive engagement.” French officials appeared taken aback and blamed Fiat Chrysler for placing “massive pressure” to quickly take the offer or leave it. They later softened their tone, indicating there might be room for future negotiation.
“We have closed no doors,” said an official at France’s Economy Ministry, responding to a question about whether an agreement could eventually be reached with Fiat Chrysler. He spoke on condition of anonymity to discuss the negotiations. In Italy, a representative of the powerful metal mechanics union expressed hope that the withdrawal was a “tough tactical position to eliminate Franco-Japanese rigidity and restart the negotiations.””The demands of Nissan and the French grandeur have caused the French and Nissan to miss a great industrial and economic opportunity,” Claudio Chiarle of the FIM-CISL union told the ANSA news agency. He said workers in both countries would be weakened if the opportunity is lost.Auto analysts Philippe Houchois and Himanshu Agarwal at Jefferies also noted that the Fiat Chrysler statement was carefully worded in a way “to leave the door open to further discussion.”Four conditions from France
News of the plan’s failure mainly hurt Renault’s shares, which tumbled 7% to 52.45 euros. Fiat Chrysler’s share price recovered from an early dip to trade up 1% to 11.83 euros. In premarket trading in New York, Fiat Chrysler shares were up by 0.7%, to $13.33.The French government, which owns 15% stake of Renault, had placed four conditions on the deal. Those are that any merger had to be completed as part of the existing alliance between Renault and Nissan, preserve French jobs and factories, respect the governance balance between Renault and Fiat Chrysler and ensure participation in an electric battery initiative with Germany.”An agreement had been reached on three of these conditions. It remained to obtain explicit support from Nissan,” said French Finance Minister Bruno Le Maire. Nissan had earlier expressed reservations about the deal, saying it raised questions about its alliance with Renault.Le Maire is traveling to Japan this weekend to meet with Nissan officials on a previously arranged visit. On Thursday, Nissan declined to comment on the latest developments.