Fiat Chrysler Automobiles (FCA) has proposed a €32.6bn (£28.3bn) merger with Renault.
According to reports by BBC News, the combined business would be 50% owned by Fiat shareholders and 50% by Renault stockholders. The merger would also create the third largest car manufacturer in the world, behind Volkswagen and Toyota.
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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 accounting scandal.
However, under the conditions of the proposal, Renualt would be able to continue its alliance with Nissan and Mitsubishi, potentially as a further cost-saving measure to the approximate amount of €1bn a year. Following the announcement, there were sharp rises in the share price of both Renault and FCA.
An advantage of the deal would be the sharing of development costs, with FCA able to utilize Renault’s electric vehicle adoption (most notably through the Renault Zoe, the top selling electric car in Europe), while FCA has a more established presence in the US market.
FCA have stated that the deal would not involve plant closures but have not eliminated the possibility of job losses in the event of the merger going through.
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By GlobalDataThe 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 proffered 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.
