Renault-Fiat Chrysler merger collapses

The proposed €33bn merger of Fiat Chrysler and Renault has collapsed after an intervention from the French government, Renault’s biggest shareholder.

Fiat Chrysler, an Italian-American company, withdrew from a 50-50 merger proposal for its French rival after a board meeting on Wednesday. A deal would have created the world’s third-largest carmaker behind Volkswagen and Toyota.

“FCA [Fiat Chrysler Autmobiles] remains firmly convinced of the compelling, transformational rationale of a proposal,” the company said.

“However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Renault said its board had been unable to press ahead with the deal because French government representatives had requested a postponement of the vote. The French government holds a stake of more than 15% in Renault. Japan’s Nissan also owns 15%.

The French finance minister, Bruno Le Maire, said on Thursday that the French state had engaged constructively with all partners in the negotiations, but that agreement had not been reached on all the government’s conditions for a deal. “What remained to be obtained was the explicit support of Nissan,” Le Maire said.

On Wednesday, Le Maire said there was no need to rush through a deal, adding that the government wanted guarantees over Renault jobs, a headquarters in Paris and corporate governance. “We want to do this merger,” he told BFM TV.

Fiat Chrysler proposed a merger with Renault last week. Carmakers around the world are under pressure to invest in electric and self-driving vehicles. The combined company would have produce 8.7m vehicles annually and saved €5bn a year by sharing research, purchasing and other activities, Fiat Chrysler argued. It said the deal would not lead to factory closures, but did not rule out job cuts.

Under the original proposals, the joint company would have been 50% owned by Fiat Chrysler shareholders and 50% by Renault shareholders.