- Fiat Chrysler’s proposed merger with Renault, which promised to create the world’s third-biggest car company, collapsed on Thursday.
- The deal fell apart due to the French government’s fears that Japanese automaker Nissan, a longtime partner of Renault, wasn’t on board and could undermine the tie-up in the future, according to Bloomberg.
- Nissan executives “fumed over what they perceived as a betrayal,” according to the Wall Street Journal.
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Fiat Chrysler’s proposed merger with Renault promised to create the world’s third-largest car company. Within two weeks of the deal’s announcement, it collapsed due to politics, miscommunication, and perceived betrayal.
The French government and Japanese automaker Nissan, both of whom hold 15% stakes in Renault, played key roles in the deal’s demise this week.
Executives at Nissan, which co-buys components with Renault and shares technology and factory space with the French carmaker, were blindsided by the prospective merger and “fumed over what they perceived as a betrayal,” according to the Wall Street Journal.
“The idea you would negotiate a merger without speaking with your 20-year partner is absolutely extraordinary,” a person close to Nissan told the Journal. “It’s about trust, and that’s the problem here.”
Nissan CEO Hiroto Saikawa warned on Monday that a deal “would require a fundamental review of the existing relationship between Nissan and Renault.”
The French side got the message — a former Renault executive emailed 10 board members to to warn them a tie-up could endanger their relationship with Nissan before their meeting to discuss the deal on Tuesday, the Journal reported.
However, Nissan’s frustration may have been lost in translation for the Americans, the Journal said.
Regardless, Renault’s board were sidetracked for an hour during their meeting with talk of Carlos Ghosn, the disgraced chairman of the Renault-Nissan-Mitsubishi Alliance, according to the Journal. They failed to take a vote or discuss Nissan’s concerns, the Journal reported.
They reconvened on Wednesday, only for the absent French Finance Minister Bruno Le Maire to tell his representative at the meeting, Martin Vial, that the government wanted a commitment from Nissan — it feared two Nissan directors’ plan to abstain from the vote could pave the way for Nissan to undermine the alliance in the future, according to Bloomberg.
Vial requested a five-day delay to allow Le Maire to win over the Japanese at the G-20 finance meeting in Japan over the weekend, according to the Journal.
The board’s request for a postponement was the “last straw” for John Elkann, chairman of Fiat Chrysler, according to the Journal. Elkann felt he had met the French state’s shifting demands on issues such as the Renault-Nissan partnership, job protections, maintaining governance, and developing battery technology, the Journal reported. He pulled the deal on Thursday, saying the merger couldn’t proceed successfully in the current political conditions.
The French government’s main concern might have been upsetting Nissan, but it may also have worried about potential job losses, particularly after French workers showed their disaffection during the yellow-vest protests late last year.