If Fiat Chrysler had been able to close a $40 billion merger with Renault, the result would be the third largest car company in the world. Europe would have a dominant force in the sector in addition to VW. Fiat Chrysler’s board killed the deal over the actions of Renault’s board.
According to a Fiat Chrysler statement:
The Board of Fiat Chrysler Automobiles N.V. (“FCA”) (NYSE: FCAU / MTA: FCA), meeting this evening under the Chairmanship of John Elkann, has resolved to withdraw with immediate effect its merger proposal made to Groupe Renault.
FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties. However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.
The French government was eager to make sure none of its citizens would lose jobs in the deal. This, in turn, may have caused the Renault board to drag its feet.
Renault also has a long-standing joint venture with Nissan, which apparently also resisted the deal. Its management believed that without Renault, its ability to do business in Europe could be compromised
The news of the potential merger set off a round of speculation about other mega-mergers in the car industry. Given slowing global sales and plant over capacity, that speculation will continue