Fiat Chrysler’s surprise decision to withdraw a merger offer with French carmaker Renault stunned the industry, collapsing Thursday on fundamental differences over when Renault’s long-time alliance partner, Nissan, would be brought in.
The merger plan, which had sought to create the world’s third-largest automaker, had been viewed positively across the industry since it was announced last week. And it appeared to be a done-deal when the Renault board met for a second day in Paris on Wednesday evening.
But Fiat Chrysler Chairman John Elkann decided to withdraw the offer as the Renault board meeting entered the early morning hours after the French government—Renault’s top shareholder with a 15% stake—asked for more time to seek Nissan’s blessing.
A person in Italy who has been close to the talks said both the French government and Nissan had agreed during the course of months-long negotiations that the Fiat Chrysler-Renault merger would happen first, and then the future of the alliance would be considered at a later stage.
The person said France essentially backtracked this week when it said it wanted the backing of Nissan before agreeing to start working on the details of a potential merger.
“A merger cannot be subject to external conditions," said the person, adding that withdrawing the offer was not a negotiating tactic. The person spoke only on condition of anonymity because details of the negotiations were not publicly disclosed.
In a statement, Fiat Chrysler cited “political conditions in France" for its withdrawal. The company said it had no hard feelings with either Renault or its alliance partner Nissan, thanking them both for their “constructive engagement."
The French government hit back by characterizing Fiat Chrysler’s behaviour as “pushy," blaming it for placing “massive pressure" to quickly take the offer or leave it. They later softened their tones, indicating there might be room for future negotiation.
“We have closed no doors," said an official at France’s economy ministry who spoke on condition of anonymity to discuss the negotiations.
Renault said it was disappointed over the lost opportunity but also talked about the offer in the present tense, indicating there was still hope to revive it: “We view the opportunity as timely, having compelling industrial logic and great financial merit, and which would result in a European-based global auto powerhouse."
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.