Image copyright Reuters

Fiat Chrysler has made a "transformative" merger proposal for French carmaker Renault, the Italian firm said on Monday.

The combined business would be 50% owned by Fiat shareholders and 50% by Renault stockholders.

The carmaker said the merger would create a global automotive leader, with 8.7 million vehicle sales.

Carmakers have faced pressure to consolidate amid major industry shifts, including towards electric vehicles.

Shares in both companies rose strongly following the announcement.

In a statement, Fiat Chrysler (FCA) said the planned merger would create a "world leader in the rapidly changing automotive industry with a strong position in transforming technologies, including electrification and autonomous driving".

Fiat said that if the firms' 2018 financial results were totted up, the combined company's annual revenues would be nearly €170bn (£149.6bn; $190.5bn), with operating profit of more than €10bn and net profit of more than €8bn.

No plant closures would be caused as a result of the tie-up, the carmaker said.

Robotics sale

It will aim to save €5bn a year by sharing development costs on technology such as electric vehicles and self-driving cars.

It is thought some managerial positions may be lost, but the companies will be keen to show that production-line jobs are being preserved.

Image copyright Getty Images

The new company will be based in the Netherlands and will be listed on the Milan, Paris and New York stock exchanges.

To make the merger one of equals, the slightly-wealthier FCA will pay a special dividend of €2.5bn and sell its Comau robotics business.

The proposal will be considered by the Renault board. Who will lead the new entity and what it might be called are not yet decided.

New competitors

If the plan goes ahead, Nissan and the French government will own about 7.5% apiece of the new, merged company.

The French government favours the merger but wants more details before giving its final approval, a spokeswoman said.

The Italian government may want to acquire a share of the new firm to balance France's stake, said a politician from the Northern League, the country's largest party, according to Reuters.

By sales, the new company will be number four in North America, number two in the region which covers Europe, the Middle East and Africa and the biggest in Latin America.

Image copyright Getty Images Image caption Carlos Ghosn is awaiting trial following his fourth arrest

Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.

Renault already has an alliance with Japan's Nissan, in which research costs and parts are shared. The companies own shares in each other, too. Renault owns 43.4% of Nissan's shares and Nissan owns 15% of Renault.

The former chief executive of both Nissan and Renault, Carlos Ghosn, is awaiting trial following his fourth arrest amid allegations of financial misconduct.

The allegations have put a strain on the 20-year-old alliance, which also includes Japan's Mitsubishi Motors.

New entrants in the motoring sector such as Tesla, as well as cash-rich companies developing driverless technology such as Amazon and Google-owned Waymo, are putting pressure on older and often heavily indebted carmakers to keep up. </s> PARIS — Renault looks set to say “yes” Tuesday to a merger with Fiat Chrysler, in a deal that could reshape the global auto industry as carmakers race to make electric and autonomous vehicles for the masses.

France and Italy are both painting themselves as winners in the deal, which could save both companies 5 billion euros ($5.6 billion) a year. But workers worry a merger could lead to job losses, and analysts warn it could bog down in the challenges of managing such a hulking company across multiple countries.

The big loser may end up being Japan’s Nissan, whose once-mighty alliance with Renault and Mitsubishi is on the rocks since star CEO Carlos Ghosn’s arrest in November.

Renault SA’s board is meeting Tuesday afternoon at its headquarters in Boulogne-Billancourt outside Paris to decide whether to accept Fiat Chrysler Automobiles’ bold merger offer of last week.

A “yes” by Renault would open the way for a non-binding memorandum of understanding to start exclusive merger negotiations. The ensuing process — including consultations with unions, the French government, antitrust authorities and other regulators — would take about a year.

A merger would create the world’s third-biggest automaker, worth almost $40 billion and producing some 8.7 million vehicles a year. That’s more than General Motors makes, and trails only Volkswagen and Toyota.

If the merged company were to include the Nissan-Mitsubishi alliance too, they’d be the No. 1 car producer in the world.

But Nissan wasn’t consulted on the potential deal, and had resisted Ghosn’s idea of a full merger with Renault before his arrest. Ghosn denies accusations of financial wrongdoing.

The French government, which owns 15% of Renault, has held talks with Renault and Fiat Chrysler Automobiles in recent days, and a government official told The Associated Press that the “dynamic is positive” and the merger “makes sense.”

The official, who spoke only on condition of anonymity in line with government policy, said the merger would produce a Netherlands-based holding company with potential operational headquarters in the Paris suburb of Boulogne-Billancourt — Renault’s home base.

The French government is insisting that any deal preserve French jobs and research and development sites, and a balance between both parties.

But the French official said it generally welcomes the deal as a win for both Renault and Fiat Chrysler, because each has strengths the other lacks.

Italian Deputy Premier Luigi Di Maio is closely following the potential merger, and said in a Facebook message Monday that it would bring “a significant added value to Italy” and he “sees our country as one of the protagonists.”

He said he took for granted that the deal would protect workers. Di Maio comes from the Naples suburb of Pomigliano, where Fiat has been building the Panda and which is slated to build a new Alfa Romeo SUV under longer-term plans to transform Italian plants to higher-margin premium vehicles.

The merger would be a bold step in the industry consolidation that many see as necessary in the capital-hungry sector.

Fiat Chrysler says 90% of savings would come from reducing spending on purchasing parts, and combining research and development, manufacturing and tooling. It estimates the savings would be achieved in six years.

Fiat has merger experience in the past. It sealed an agreement with U.S. officials in 2009 to take over bankrupt Chrysler in exchange for small-car technology and managerial expertise. The deal secured Fiat’s survival, with Chrysler now the carmaker’s big cash machine on the strength of Jeeps SUVs and Ram trucks.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. </s> Fiat Chrysler said on Wednesday it was withdrawing its US$35 billion merger offer for Renault.

PARIS/MILAN: Fiat Chrysler said on Wednesday it was withdrawing its US$35 billion merger offer for Renault.

A source close to the French carmaker's board said FCA took the decision after France sought to delay a decision on the deal.

Renault directors failed to reach a verdict on FCA's May 27 merger proposal at a board meeting that ran late into Wednesday night, the company said.

The board was "unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting", Renault said in a statement. </s> MILAN — Fiat Chrysler's proposal to merge with French rival Renault has industry executives, analysts and union leaders rushing to figure out how it would reshape the sector worldwide.

A deal would create the third-largest automaker with annual sales of 8.7 million vehicles, behind Volkswagen and Toyota. It would be a bold step in the industry consolidation that many see as necessary in the capital-hungry sector, which Fiat Chrysler Automobiles says would create 5 billion euros ($5.6 billion) in savings.

Yet, while Renault has indicated it is open to talks, the plan faces hurdles and questions, including where savings - and perhaps even job cuts - will come from.

Here's a look at the proposed deal.

Fiat Chrysler made public its plan on Monday, and is awaiting a response from Renault. The Renault board met Monday to discuss what they termed "a friendly offer." The French government holds a 15% stake in Renault, and will have a say in the outcome.

Renault's board will hold a new meeting early next week to decide on whether to say yes or no to the proposal. A "yes" would open the way for a non-binding memorandum of understanding to open exclusive merger negotiations with Fiat Chrysler. The ensuing process would involve consultations with unions, the government, antitrust authorities in all relevant jurisdictions, as well as other regulators. It would take about a year.

One particular impact a deal could have is on Renault's existing alliance with Japanese partners Nissan and Mitsubishi.

Questions over the future of that alliance have grown since the criminal investigation into the former head of Renault and Nissan, Carlos Ghosn, who denies wrongdoing. Ghosn intended to merge the two, but industry analyst Ferdinand Dudenhoeffer says the deal had little appeal for the Japanese. He noted that Renault's sales represented just 36% of alliance sales - and the Japanese didn't want to see the French carmaker drive a merger with those numbers.

It is unclear whether they would be amenable to a bigger tie-up, adding Fiat Chrysler to the mix.

Renault Chairman Jean-Dominique Senard is in Tokyo on Wednesday for a monthly meeting of Renault-Nissan-Mitsubishi management, where he will discuss the merger proposal with his Japanese partners. The French Union CGT union has warned that the biggest risk of the proposed merger between Renault and Fiat Chrysler is "to declare war on Nissan-Mitsubishi," due to their apparent resistance to full mergers.

The deal makes a lot of sense strategically: Renault is strong in Europe, Fiat Chrysler in North America; Renault's focus is passenger cars and Fiat Chrysler's is in SUVs and big trucks, while it works to boost its Italian luxury marquees Maserati and Alfa Romeo.

Renault, critically, has electric and hybrid technology that Fiat Chrysler lacks. Through Nissan-Mitsubishi, a foothold in Asia, where Fiat has struggled, would give an expanded alliance even stronger appeal for Fiat.

And both automakers need to make serious investments to develop new driving technologies, like autonomous driving.

Fiat Chrysler can flaunt the fact that it has done well merging its Italian and American sides over the past decade.

Fiat's late CEO Sergio Marchionne, a master dealmaker, sealed an agreement with U.S. officials in 2009 to take over bankrupt Chrysler in exchange for small-car technology and managerial expertise. The deal secured Fiat's survival, with Chrysler now the carmaker's big cash machine on the strength of Jeeps SUVs and Ram trucks. Marchionne died unexpectedly last July, and his successor, CEO Mike Manley, who long worked alongside Marchionne for years, has taken up the deal-making mantle along with Chairman John Elkann, heir to the Fiat-founding Agnelli family.

This could be one of the biggest hurdles.

The French government says that any deal needs to protect all French jobs and factories, and preserve Renault's existing alliance with Nissan and Mitsubishi. Italy does not hold the same sway over Fiat Chrysler, but Deputy Premier Matteo Salvini likewise says any deal must preserve Italian jobs.

Fiat Chrysler says 90% of savings would come from reducing spending on purchasing parts, and combining research and development, manufacturing and tooling. It estimates the savings would be achieved in six years.

On the one hand, Fiat Chrysler has already slimmed down since the financial crisis, combining many administrative functions following the merger. U.S. plants are running at capacity and Fiat Chrysler is looking to build a new assembly plant and retool another, regardless of the proposed merger. In Italy, it is planning investments of 5 billion euros.

But the French union CGT noted that it took 18 years for the Renault-Nissan alliance to achieve a pace of 5 billion euros per year in savings.

Charlton reported from Paris. Tom Krisher in Detroit contributed to this report. </s> French automaker Renault said Monday that it would study "with interest" a 50-50 merger proposal from Fiat Chrysler, a deal that could reshape the industry as Renault reviews its options following the arrest in Japan of its chief executive.

Renault had for years tied its strategy to a partnership with Japanese automaker Nissan but this has come into question after the arrest and subsequent ouster of Carlos Ghosn at both companies.

After a board meeting over what it termed a "friendly" offer, Renault said it would enter talks on a merger that would create additional value while bolstering its manufacturing footprint.

Investors cheered the prospect, with Renault's shares soaring 15 percent in midday trading in Paris, and Fiat Chrysler stock up more than 10 percent in Milan.

The tie-up would forge the world's third-largest automaker, giving Fiat access in particular to Renault's electric car technologies.

Renault, for its part, could get access to Fiat Chrysler's extensive US operations, and its expertise in trucks and SUVs.

The idea has the backing of the French government, which owns a 15 percent stake in Renault, after Fiat said the merger would not result in the closure of any production sites.

"The government is in favour... but the terms of this merger must be supportive of Renault's economic development, and obviously of Renault's employees," government spokeswoman Sibeth Ndiaye said Monday.

"We have very large companies, giants, that are being created outside of Europe, and today we needs giants to be created in Europe," she told BFM television, adding that Finance Minister Bruno Le Maire had been informed of the talks by Renault board chairman Jean-Dominique Senard last week.

France's CGT labour union, the second-largest at Renault, called on the government to maintain a blocking minority after any deal, which could see the state's stake diluted in a merger.

Renault was plunged into disarray last November with the arrest in Tokyo of Ghosn, who was also chairman of its Japanese partner Nissan.

That alliance, which also includes Mitsubishi, sells around 10.8 million automobiles per year in total, compared with Germany's Volkswagen and Japan's Toyota, both with around 10.6 million.

But its future is in doubt following Ghosn's ouster at both Renault and Nissan, with Tokyo in particular bristling over a push by the French side for deeper integration.

Renault holds 43 percent in Nissan, which in turn owns 15 percent of its French partner. Despite pledges on both sides to pursue the alliance, analysts say the tensions might be pushing Renault to explore alternatives.

Fiat Chrysler said its proposal for Renault would create "a pre-eminent global automotive group" with annual sales of 8.7 million vehicles.

The brand portfolio of the two groups would be "broad and complementary... and would provide full market coverage, from luxury to mainstream", it said.

The combination would be carried out as a merger transaction under a Dutch parent company, with shares in the new group listed in Paris, Milan and New York.

Fiat Chrysler has been under pressure in Europe, stoking speculation it was looking for a partner as the industry is pushed to consolidate in the face of declining demand and a costly switch into electric cars.

Fiat Chrysler is widely seen as a latecomer to the electric vehicle market but does well in the US SUV and pick-up sectors.

Renault meanwhile has pushed ahead in electric cars but is relatively weak in North America, so the two companies would seem a good fit.

Fiat Chrysler said the merger would put the group in "a strong position in transforming technologies, including electrification and autonomous driving."

Early this year, rumours circulated that Renault was interested in Fiat-Chrysler after its hopes for a full merger with Nissan or even French competitor PSA were dashed.

Fiat Chrysler predicted that the merger would generate more than five billion euros ($5.6 billion) of cost-savings and other synergies, on top of the benefits from the Renault-Nissan-Mitsubishi alliance.

All counted, including Nissan and Mitsubishi, a combination with Fiat Chrysler would mean the production of close to 16 million vehicles, besting Volkswagen and Toyota. </s> PARIS (Reuters) - Fiat Chrysler said on Wednesday it was withdrawing its $35 billion merger offer for Renault (RENA.PA), blaming French politics for scuttling what would have been a landmark deal to create the world’s third-biggest automaker.

A source close to the French carmaker’s board said Fiat Chrysler made the move after France sought to delay a decision on the deal in order to win the support of Nissan Motor Co, Renault’s Japanese alliance partner.

French government officials had pushed for Nissan to support the merger. Nissan had said it would abstain.

The French government, which owns a 15% stake in Renault, had also pushed Fiat Chrysler and Renault for guarantees that France would not lose jobs, and for a dividend to be paid to Renault shareholders, including the government, people familiar with the talks said.

“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.

Renault, in a separate statement, said its board was “unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting.”

The apparent collapse of merger talks leaves the two companies facing an array of issues, starting with the likely dismay of investors who bid up shares in both companies after Fiat Chrysler proposed a merger of equals just over a week ago.

Fiat Chrysler had proposed that its shareholders receive a 2.5 billion euro ($2.8 billion) special dividend as part of the merger, had it been completed.

The two companies told investors a merger would cut running costs by 5 billion euros ($5.6 billion) or more a year. Fiat Chrysler stood to gain access to Renault’s superior electric drive technology to meet mandates for zero-emission cars.

Renault would have had a share of the Italian-American company’s lucrative Jeep sport utility vehicle and RAM pickup truck franchises.

It is not clear what the two companies will do next to tackle the costs of far-reaching technological and regulatory changes. Fiat Chrysler had held inconclusive talks with France’s PSA Group, which also has the French government as a shareholder.

The sudden end to the merger talks came after midnight in Paris, after Fiat Chrysler and French government officials had reached a tentative agreement that cleared the way for Renault’s board to consider moving forward, people familiar with the situation said.

Renault’s previous alliance and cross-shareholding with Japanese automaker Nissan had loomed all along as a potential snag. Nissan Chief Executive Hiroto Saikawa met last week with Renault Chief Executive Jean-Dominique Senard, and said he did not see “any particular negative aspect” to the proposed Renault-Fiat Chrysler merger.

But people familiar with the situation said Nissan executives were blindsided by the merger proposal. A Nissan spokesman had no immediate comment. </s> Image copyright Reuters

Fiat Chrysler has withdrawn its merger proposal for French carmaker Renault, the Italian-American firm has said.

The announcement followed a failed attempt by Renault board members to reach a decision on the offer.

Renault said it had been unable to reach agreement because French government representatives had requested a postponement.

The French government is the biggest shareholder in Renault, with a stake of more than 15%.

Japan's Nissan also owns 15% of Renault, while Renault owns 43.4% of Nissan's shares.

Renault's share price fell by nearly 7% on Thursday in response to Fiat Chrysler's decision.

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 the carmaker 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".

Challenging times

Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.

Older, and often heavily indebted carmakers, also face rising competition from new entrants in the motoring sector including Tesla, as well as cash-rich companies developing driverless technology such as Amazon and Google-owned Waymo.

The Fiat Chrysler tie-up with Renault would have allowed the companies to share development costs on key technology such as electric vehicles and self-driving cars and to create an important player in the automotive industry.

The merger proposal came at a time when Renault had already been facing challenges as part of an alliance with Japan's Nissan.

The former chief executive of both Renault and Nissan, Carlos Ghosn, is awaiting trial following his fourth arrest in Japan amid allegations of financial misconduct.

The allegations have put a strain on the 20-year-old alliance, which also includes Japan's Mitsubishi Motors. </s> PARIS (AP) — Fiat Chrysler is proposing a merger with French carmaker Renault aimed at saving billions of dollars for both companies.

Fiat Chrysler Automobiles said in a statement Monday that the merged company would be 50 percent owned by FCA shareholders and 50 percent by Renault shareholders.

Renault's board is meeting outside Paris on Monday morning about the possible merger.

The companies have been in discussions for weeks, as major world carmakers seek ways to save money amid the huge costs of pivoting the industry to electric and autonomous cars.

Renault is already in an alliance with Japan's Nissan and Mitsubishi, but the partnership has been troubled since the November arrest of joint chief Carlos Ghosn.

The French government, which owns 15 percent of Renault, is cautious about the new merger idea. </s> PARIS/MILAN June 6 (Reuters) - Fiat Chrysler said on Wednesday it was withdrawing its $35 billion merger offer for Renault.

A source close to the French carmaker's board said FCA took the decision after France sought to delay a decision on the deal.

Renault directors failed to reach a verdict on FCA's May 27 merger proposal at a board meeting that ran late into Wednesday night, the company said.

The board was "unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting", Renault said in a statement. (Reporting by Laurence Frost Editing by Bill Rigby)
Italian firm Fiat Chrysler proposes a merger with French carmaker Renault. The new company will be based in the Netherlands and will be listed on the Milan, Paris and New York stock exchanges.