It ended almost as soon as it started. Fiat Chrysler Automobiles (FCA) have abruptly walked away from merger talks with Renault. The collapse of the merger was also a silent victory to Nissan. The Japanese side of the Renault Nissan Mitsubishi Alliance has repeatedly rebuffed Renault’s attempts to push for a full merger and the proposed deal with FCA was an attempt by Renault to further dilute Nissan’s influence within the Alliance.
Favour must be upon Nissan because the Japanese didn’t have to do anything but simply sat on the sidelines, abstained from voting for/against the merger, and watched as the hastily put together proposal collapsed at the first encounter of difficulty.
FCA’s press release puts the blame squarely on the French government, which owns a 15 percent stake in Renault. The company said:
“FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties. However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
The disagreement was reportedly due to FCA’s refusal to meet the French government’s terms related to job security, governance, and that it must gain the support of Nissan – without which the French government fears the deal would eventually collapse.
The fact that FCA’s CEO John Elkann was irked by these demands was a surprise, because these topics are very consistent with the French government’s stance on industries and it was one of the reasons why they sought to have a board level representation in Renault in the first place.
With the unnecessary distraction out of the way, Nissan CEO Hiroto Saikawa can now resume his focus on putting Nissan back on a firm footing, undo the damages of the ousted Carlos Ghosn, and seek for a fairer deal within the Alliance.
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