Fiat Chrysler Automobiles (FCA) has confirmed market rumours that it is in talks to merge with Renault. The proposal is still being discussed between the two parties but FCA have confirmed that the proposed merger will see the New York- and Milan-listed FCA forming a new company that’s owned in equal parts by FCA and Renault.
Similar to the arrangements with Renault-Nissan-Mitsubishi Alliance, the new company will be registered in Netherlands. The proposed merger is limited only to FCA and Renault, with limited involvement of the Renault-Nissan-Mitsubishi Alliance.
However FCA says the proposed deal will bring in an excess of 5 billion Euros in estimated annual run rate synergies incremental to existing Renault-Nissan-Mitsubishi Alliance (Alliance) synergies.
The proposed company will have 11 board members, four each from FCA and Renault, while Nissan, which is 43.4 percent-owned by Renault, is invited to nominate one representative. The remaining board members will be made up of independent members.
The combined numbers of FCA and Renault (about 8.7 million cars produced annually) will mean that if the deal goes through, the merged entity will overtake General Motors to become the world’s third largest automaking group, behind Toyota and Volkswagen, each making slightly over 10 million cars annually.
The move by Renault to go into talks with FCA comes after a tumultuous relationship with its Alliance partner Nissan, which has resisted Renault’s push for a full merger, citing an unfair relationship within the Alliance.
Renault owns 43.4 percent of Nissan with full voting rights while Nissan holds a mere 15 percent of non-voting rights in Renault. However, much of the heavy lifting is done by Nissan as opposed to Renault, as Nissan is a far more profitable brand, delivering much bigger volumes in Asia and North America – markets with Renault are either not present in or has negligible sales.
The sourced relationship is said to be the reason why Nissan supported a whistle blowing case against the misconduct of ex-Alliance CEO Carlos Ghosn, who has been pushing a complete merger between Renault and Nissan.