Breaking: FCA Withdraws Renault Merger Proposal After Delayed Vote

FCA withdraws Renault merger

Renault’s board postponed its decision on a merger with FCA.

Fiat Chrysler Automobiles (FCA) confirmed it had withdrawn its merger proposal to Renault Wednesday, as Nissan reportedly refused to support the deal. The Wall Street Journal stated that Nissan representatives were doubtful about the automaker’s commitment to the Renault-Nissan-Mitsubishi Alliance if the merger actually went through.

The French government holds a 15 percent stake in Renault, and they asked the company to postpone its decision until Nissan declared its support. Officials said they would not support the deal unless Nissan reaffirmed its commitment to the alliance. As a result, Renault’s board of directors postponed the vote for a second time this week.

FCA, of its own accord, decided to withdraw its proposal. In a statement, the company said, “The Board of Fiat Chrysler Automobiles NV, meeting this evening under the chairmanship of John Elkann, has resolved to with draw with immediate effect its merger proposal made to Groupe Renault. FCA expresses its sincere thanks [to Renault], in particular its chairman and its chief executive officer, and also to the alliance partners at Nissan Motor Company and Mitsubishi Motors Corporation, for their constructive engagement on all aspects of FCA’s proposal.”

Were job cuts inevitable with the merger?

Going further, the company said the political conditions do not currently exist in France for the merger to happen successfully. Here in the U.S., however, several parties were concerned about the merger’s impact on local jobs.

Erik Gordon, a law processor at the University of Michigan, gave his thoughts on the proposal Tuesday, as reported by the Detroit Free Press. “The problem is that a merger makes little sense without job cuts. Without cuts, the resulting company would be an inefficient, bloated hippopotamus of a company.” FCA contended that this merger with Renault would happen without any job cuts. Furthermore, it would not affect FCA’s planned plant expansion in the Detroit area, which aims to add 5,000 jobs to the local economy.

For the time being, it seems, the FCA-Renault merger proposal is dead. The company concluded its statement by saying, “FCA will continue to deliver on its commitments through the implementation of its independent strategy.”