Fiat Chrysler Automobile Group (FCA) has withdrawn its offer to merge with French car manufacturer Renault in a deal that could have been worth up to €32.6bn (£28.3bn).
The combined business would have been 50% owned by Fiat shareholders and 50% by Renault stockholders. The merger would have also created the third largest car manufacturer in the world, behind Volkswagen and Toyota.
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The offer was withdrawn after a six hour meeting between Renault board members ended with members, including the French government which owns a 15% stake, requesting a delay.
Shares in Renault have fallen 7% with the news of the offer withdrawal, while Nissan, who are the second biggest shareholder in Renault, fell by 3.6%.
Renault is currently in an alliance with Nissan and Mitsubishi, but deep divisions in the triumvirate have been exposed since the deposition of group chief executive officer Carlos Ghosn last November over a false salary declaration scandal.
However, under the conditions of the proposal, Renault would have been able to continue its alliance with Nissan and Mitsubishi, potentially as a further cost-saving measure to the approximate amount of €1bn a year.
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By GlobalDataAccording to reports from The Financial Times, people close to Nissan said that they were “not hugely surprised” at FCA’s decision, given recent signals and their experience in negotiating with the French government.
The possibility of a FCA Renault merger has only become apparent in recent weeks following extensive back room negotiations between the two car-making giants. Talks between Renault and Nissan over a full merger have also broken down, and it has been suggested that all of these negotiations would not have been possible if Ghosn remained as head of the Renault-Nissan-Mitsubishi alliance.
A merger between Renault and Nissan was discussed two to three years ago, when Ghosn sat as chairman for both car manufacturers. Those proposals were at the time blocked by the French government.
