Fiat Chrysler, Renault hit roadblock over merger

The headquarters of Fiat Chrysler Automobiles in Turin, Italy. Its proposed 50-50 merger with Renault would enable both companies to tap each other's strengths and forge the world's third-largest automaker.
The headquarters of Fiat Chrysler Automobiles in Turin, Italy. Its proposed 50-50 merger with Renault would enable both companies to tap each other's strengths and forge the world's third-largest automaker.PHOTO: NYTIMES

French carmaker said to be eyeing a sweeter offer: Report

PARIS • Talks between Fiat Chrysler Automobiles (FCA) and Renault have hit a roadblock over the financial terms of the proposed merger between the Italian-United States and French carmakers, French business daily Les Echos said online on Thursday, citing sources close to FCA.

Renault said earlier this week it is studying "with interest" a 50-50 merger proposal from FCA, a deal that would forge the world's third-largest automaker.

The newspaper reported on its website that a source close to FCA said that several Renault board members believe the terms of the offer need to be sweetened.

But that is not how FCA sees things, said the source, who added: "The offer seems fair, it was approved by the board. It is 'take it or leave it', and fast!"

Meanwhile, Les Echos said Renault is unhappy as the offer is based on its share price of €51.70 on Friday last week, the day before the offer was announced.

Renault's share price has been punished since the arrest of its former chief executive Carlos Ghosn in November last year. Before that, it had rarely fallen below €70 per share.

An AFP source close to the negotiations said such merger offers are rarely "take it or leave it".

"This type of offers are certainly negotiable," said the source.

A source close to Renault told AFP that without the carmaker's board having adopted a position, it was difficult to comment on rumours.

Another source close to FCA said "the offer is balanced in terms of valuation, governance and industrial strength".

A deal would hold advantages for both carmakers. FCA is widely seen as a latecomer to the electric vehicle market, where Renault is strong. But the French firm lacks a presence in North America, where Chrysler is strong in the sport utility vehicle and pick-up sectors.

Taking into account Renault's alliance with Nissan and Mitsubishi, the enlarged group would be the world's largest carmaking group by a wide margin.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on June 01, 2019, with the headline 'Fiat Chrysler, Renault hit roadblock over merger'. Print Edition | Subscribe