Fiat Chrysler withdraws its offer for Renault

Reuters

Renault issued a statement that it had been reviewing the potential 50/50 merger "with interest" but was unable to reach a decision because representatives of the French State - which owns 15 per cent of Renault - had asked for the automaker's vote to be postponed to a later meeting.

What's more, tension with the French government means any chances for an alternative deal with Peugeot maker Groupe PSA, which also counts the state as an owner, are likewise nil.

If Renault's board says "yes" to Fiat Chrysler, that would open the way for a non-binding memorandum of understanding to start exclusive merger negotiations. Explaining why it backed out of the deal, FCA said it found that the political conditions in France were now not conducive for this deal to go forward.

Fiat Chrysler added it remains firmly convinced of the "compelling and transformational rationale" of the proposal that has been "widely appreciated" since it was submitted.

Le Maire is traveling to Japan this weekend to meet with Nissan officials on a previously arranged visit.

Shares of Renault fell as much as 8pc, the most since November. "It remained to obtain explicit support from Nissan", Le Maire said.

When it first made the merger proposal last month, Fiat Chrysler said a combination would produce annual cost savings of more than €5 billion ($5.6 billion).

The news comes after Fiat Chrysler had proposed a "merger of equals" aimed at forging an automotive giant.

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The French government, which has a 15% stake in Renault, had welcomed the merger plan, but overplayed its hand by pushing for a series of guarantees and concessions that eventually exhausted the patience of FCA, sources familiar with the talks said.

"We appreciate Nissan's constructive approach and wish to thank FCA for their efforts and the Renault's board of directors for its continued confidence", said Renault in a statement. The company has blamed French politics for the failed merger bid.

"In late 2018, presumably as a way to wrap up their investigation with some result, the SEC suggested to plaintiff that he admit to some wrongdoing as to defendants' monthly sales reporting", Gordon further said in a statement as part of the lawsuit.

FCA has always been looking for a merger partner, and some analysts say its search for a deal is becoming more urgent as it is ill-prepared for tougher new regulations on emissions.

Yokohama-based Nissan makes the world's best-selling electric auto Leaf. Now, the two companies apparently must find a new way to address any shortcomings at a time when the auto industry is in the midst of a global sales slowdown and facing enormous expenses to develop future technologies.

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

It is possible that the government may have said something about the deal which led to its eventual withdrawal.

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