Fiat Withdraws Merger Offer
Fiat Chrysler has withdrawn its proposal to merge with French automaker Renault — a deal that would have reshaped the global auto industry and helped the carmakers compete in the race for electric and self-driving vehicles. The company said Wednesday that it “has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
Earlier in the day, Renault indicated the French government requested its board of directors postpone the vote on the merger. France, which owns 15% of Renault, previously indicated that it would support a merger if the companies protect French jobs and auto plants.
Fiat Chrysler made the offer for Renault at the end of last month, describing it as a “transformative” proposal that would create a global automotive leader. Carmakers have faced pressure to consolidate amid major industry shifts, including towards electric vehicles. “It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” Fiat Chrysler said in a statement.
But it said it remained “firmly convinced of the compelling, transformational rationale” of the proposal, the terms of which were “carefully balanced to deliver substantial benefits to all parties”.
Fiat Chrysler was formed as a merger of two struggling automakers. Fiat bought a controlling stake in Chrysler following the US government bailout of the company in 2009. They were formally merged in 2014. But Fiat Chrysler is a distant fourth in US sales and 8th globally. The company has also trailed its competitors in adopting electric vehicle and self-driving technology, which many deem the industry’s inevitable future.
Sergio Marchionne, its former CEO who passed away a year ago, had spoken openly of the need to merge Fiat Chrysler with a larger automaker to give it the scale and resources to compete. He had even sought a merger with General Motors, only to be rebuffed. He had been far more blunt than other auto executives about the threat to the industry that new entrants such as Google posed to old-line automakers.