Tokyo: Renault SA is seeking to restart merger talks with Nissan Motor Co. within 12 months as the first step toward the creation of a bigger auto conglomerate that will involve a bid by both companies for Fiat Chrysler Automobiles NV, the Financial Times reported.

The creation of a new alliance board led by Renault chairman Jean-Dominique Senard has improved confidence that the two sides can push ahead with merger plans, the newspaper reported Wednesday, citing unidentified people familiar with both sides’ thinking.

A combination of Renault, Nissan, Fiat and Chrysler would create an automaker that could better compete against global competitors such as Volkswagen AG and Toyota Motor Corp. Carlos Ghosn, the former chairman of Renault and Nissan who was arrested in Tokyo in November on charges of financial wrongdoing, had held talks about merging Renault with Fiat Chrysler two to three years ago, the Financial Times reported, citing two unidentified sources.

Ghosn’s proposal was stopped by the French government, the newspaper said.

Ghosn, who is free on bail pending his trial, has denied the charges against him.

Fiat Chrysler itself is seeking a partnership or merger, and chairman John Elkann has met with other rivals including France’s Peugeot SA to gauge the possibility of a deal, the newspaper reported.

Spokesmen for Renault and Nissan declined to comment on the report. Representatives for Fiat Chrysler didn’t immediately respond to a request for comment outside regular business hours in Europe.

Before his arrest, Ghosn had planned to cement the alliance of Nissan and Renault in a full merger. Still, such a move faced resistance from within Nissan, including from chief executive officer Hiroto Saikawa. Instead of a deeper capital tieup, Nissan has sought to improve the Japanese bargaining position in a partnership it has said has for too long favored the French side.

The Renault-Nissan alliance has often been cited as an example of a successful combination that didn’t go as far as a merger, underpinned by cross-shareholdings and cost cutting. Yet the partnership has been strained by the scandal surrounding Ghosn, with insiders from both sides saying trust between the two teams has degraded since the executive was jailed and ousted as chairman of both Nissan and Renault.

Still, this month the partnership agreed to a new governance structure designed to streamline operational decisions, with Senard placed as the chairman of the alliance.

Renault, which owns 43% of Nissan, has a market capitalization of about €16.8 billion ($18.9 billion). Nissan’s market value is about $35 billion, while Fiat Chrysler’s market cap is about $23 billion.

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