Italian-American carmaker Fiat Chrysler on Thursday said it had withdrawn a proposal for a merger with Renault, saying it would be unable to reach an agreement with the French government.

Fiat Chrysler (FCA) "remains firmly convinced" of the interest of its offer but "political conditions do not currently exist in France to carry out such an arrangement", it said in a statement.

French automaker Renault announced earlier that its board of directors had not made a decision following a crunch meeting held at the request of the French state, the biggest shareholder in Renault with a 15 percent stake.

The government has warned against "any haste" regarding the proposed 50/50 merger.

French Finance Minister Bruno Le Maire said he wanted a board meeting next Tuesday after a trip to Japan scheduled for the weekend, a source close to Renault said.

At Wednesday evening's board of directors vote at Renault's headquarters near Paris, all the directors were for the merger, apart from a representative of employees affiliated with the powerful CGT union and two representatives of Nissan -- a long-time Renault partner -- who abstained, the source added.

The two directors appointed by Nissan, however, asked "to write in the minutes that they would say yes with a little more time".

Fiat Chrysler 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." </s> Fiat Chrysler said on Wednesday it was withdrawing its US$35 billion merger offer for Renault.

PARIS/MILAN: Fiat Chrysler said on Wednesday it was withdrawing its US$35 billion merger offer for Renault.

A source close to the French carmaker's board said FCA took the decision after France sought to delay a decision on the deal.

Renault directors failed to reach a verdict on FCA's May 27 merger proposal at a board meeting that ran late into Wednesday night, the company said.

The board was "unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting", Renault said in a statement. </s> Fiat Chrysler has withdrawn its merger proposal for French carmaker Renault, the Italian firm has said.

The announcement followed a failed attempt by Renault board members to reach a decision on the offer.

Renault said it had been unable to reach agreement because French government representatives had requested a postponement.

The French government is the biggest shareholder in Renault, with a stake of more than 15%.

Japan's Nissan also owns 15% of Renault, while Renault owns 43.4% of Nissan's shares.

Fiat Chrysler made the offer for Renault at the end of last month, describing it as a "transformative" proposal that would create a global automotive leader.

In its statement, Fiat Chrysler said it remained "firmly convinced" of the "compelling, transformational rationale" of the tie-up.

It said the terms had been "carefully balanced to deliver substantial benefits to all parties".

It added: "However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully."

Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.

The former chief executive of both Nissan and Renault, Carlos Ghosn, is awaiting trial following his fourth arrest amid allegations of financial misconduct.

The allegations have put a strain on the 20-year-old alliance, which also includes Japan's Mitsubishi Motors. </s> PARIS/MILAN June 6 (Reuters) - Fiat Chrysler said on Wednesday it was withdrawing its $35 billion merger offer for Renault.

A source close to the French carmaker's board said FCA took the decision after France sought to delay a decision on the deal.

Renault directors failed to reach a verdict on FCA's May 27 merger proposal at a board meeting that ran late into Wednesday night, the company said.

The board was "unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting", Renault said in a statement. (Reporting by Laurence Frost Editing by Bill Rigby) </s> PARIS (Reuters) – Fiat Chrysler said on Wednesday it was withdrawing its $35 billion merger offer for Renault, calling off what would have been a landmark deal to create the world’s third-biggest automaker.

A source close to the French carmaker’s board said FCA took the decision after France sought to delay a decision on the deal.

Renault directors failed to reach a verdict on FCA’s May 27 merger proposal at a board meeting that ran late into Wednesday night, the company said.

The board was “unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting”, Renault said in a statement.

The deal, cast as a merger of equals that would tackle the costs of far-reaching technological and regulatory changes, would have altered the landscape for rivals including General Motors and Peugeot-maker PSA Group, which recently held inconclusive talks with Fiat Chrysler.

FCA, Renault and its 15% shareholder, the French state, had been locked in talks over the Italian-American manufacturer’s bid. France had broadly welcomed the tie-up, on condition it guaranteed Renault’s domestic blue-collar jobs and plants.

Analysts had warned of complications, including Renault’s existing alliance with Nissan, the French state’s role as Renault’s largest shareholder and potential opposition from politicians and workers to any cutbacks. </s> PARIS (Reuters) - Fiat Chrysler said on Wednesday it was withdrawing its $35 billion merger offer for Renault (RENA.PA), blaming French politics for scuttling what would have been a landmark deal to create the world’s third-biggest automaker.

A source close to the French carmaker’s board said Fiat Chrysler made the move after France sought to delay a decision on the deal in order to win the support of Nissan Motor Co, Renault’s Japanese alliance partner.

French government officials had pushed for Nissan to support the merger. Nissan had said it would abstain.

The French government, which owns a 15% stake in Renault, had also pushed Fiat Chrysler and Renault for guarantees that France would not lose jobs, and for a dividend to be paid to Renault shareholders, including the government, people familiar with the talks said.

“It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” Fiat Chrysler said in a statement.

Renault, in a separate statement, said its board was “unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting.”

The apparent collapse of merger talks leaves the two companies facing an array of issues, starting with the likely dismay of investors who bid up shares in both companies after Fiat Chrysler proposed a merger of equals just over a week ago.

Fiat Chrysler had proposed that its shareholders receive a 2.5 billion euro ($2.8 billion) special dividend as part of the merger, had it been completed.

The two companies told investors a merger would cut running costs by 5 billion euros ($5.6 billion) or more a year. Fiat Chrysler stood to gain access to Renault’s superior electric drive technology to meet mandates for zero-emission cars.

Renault would have had a share of the Italian-American company’s lucrative Jeep sport utility vehicle and RAM pickup truck franchises.

It is not clear what the two companies will do next to tackle the costs of far-reaching technological and regulatory changes. Fiat Chrysler had held inconclusive talks with France’s PSA Group, which also has the French government as a shareholder.

The sudden end to the merger talks came after midnight in Paris, after Fiat Chrysler and French government officials had reached a tentative agreement that cleared the way for Renault’s board to consider moving forward, people familiar with the situation said.

Renault’s previous alliance and cross-shareholding with Japanese automaker Nissan had loomed all along as a potential snag. Nissan Chief Executive Hiroto Saikawa met last week with Renault Chief Executive Jean-Dominique Senard, and said he did not see “any particular negative aspect” to the proposed Renault-Fiat Chrysler merger.

But people familiar with the situation said Nissan executives were blindsided by the merger proposal. A Nissan spokesman had no immediate comment. </s> Image copyright Reuters

Fiat Chrysler has withdrawn its merger proposal for French carmaker Renault, the Italian-American firm has said.

The announcement followed a failed attempt by Renault board members to reach a decision on the offer.

Renault said it had been unable to reach agreement because French government representatives had requested a postponement.

The French government is the biggest shareholder in Renault, with a stake of more than 15%.

Japan's Nissan also owns 15% of Renault, while Renault owns 43.4% of Nissan's shares.

Renault's share price fell by nearly 7% on Thursday in response to Fiat Chrysler's decision.

Fiat Chrysler made the offer for Renault at the end of last month, describing it as a "transformative" proposal that would create a global automotive leader.

Carmakers have faced pressure to consolidate amid major industry shifts, including towards electric vehicles.

"It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully," Fiat Chrysler said in a statement.

But the carmaker said it remained "firmly convinced of the compelling, transformational rationale" of the proposal, the terms of which were "carefully balanced to deliver substantial benefits to all parties".

Challenging times

Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.

Older, and often heavily indebted carmakers, also face rising competition from new entrants in the motoring sector including Tesla, as well as cash-rich companies developing driverless technology such as Amazon and Google-owned Waymo.

The Fiat Chrysler tie-up with Renault would have allowed the companies to share development costs on key technology such as electric vehicles and self-driving cars and to create an important player in the automotive industry.

The merger proposal came at a time when Renault had already been facing challenges as part of an alliance with Japan's Nissan.

The former chief executive of both Renault and Nissan, Carlos Ghosn, is awaiting trial following his fourth arrest in Japan amid allegations of financial misconduct.

The allegations have put a strain on the 20-year-old alliance, which also includes Japan's Mitsubishi Motors. </s> Fiat Chrysler Automobiles NV abruptly withdrew its offer to combine with Renault SA after the French carmaker’s board—on the brink of approving the deal—postponed a decision for a second time in as many days.

Renault’s board ended an hours-long meeting early Thursday without a vote after its most important shareholder, the French state, requested deliberations by put off to a later date. Renault, in a statement issued before Fiat’s withdrawal, said it would continue to review “with interest” the proposal.

Fiat Chrysler blamed the French government, which has ratcheted up demands over jobs, governance and other items since the deal was announced on May 27.

The maker of Jeep SUVs and Ram pickups “remains firmly convinced of the compelling, transformational rationale” of a proposal that was “carefully balanced to deliver substantial benefits to all parties,” it said separately. “However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

The collapse of his proposal to create the world’s third-largest automaker marks a significant retreat for Chairman John Elkann, who leads the company’s founding Agnelli family. After discussions with Renault’s cross-town rival Groupe PSA, Elkann opted for the riskier path, proceeding with an offer for Renault despite the complications of the government’s role and its strained relationship with alliance partner Nissan Motor Co.

The breakdown of talks on a night when a deal appeared to be in hand also leaves Renault Chairman Jean-Dominique Senard in a difficult position, having sought and failed to bring the French carmaker’s various constituencies into agreement. In addition to the demands from the French state, unions were worried about jobs and Japanese partner Nissan felt burned by the previous regime under deposed alliance Chairman Carlos Ghosn.

Renault’s board was poised to approve the deal, with Nissan representatives abstaining, according people familiar with the matter. But France’s representatives asked for more time after officials made clear they wanted to discuss with Japanese authorities before making a decision, they said. Finance minister Bruno Le Maire plans a trip to Japan soon, one of the people added.

More time was needed to reassure the Japanese side and explain the deal, a French government official said, asking not to be identified to comply with ground rules. The person added that the government found surprising Fiat’s rushed move to withdraw its offer.

A spokesman for the minister didn’t return requests for comment.

Criticism of Fiat’s May 27 proposal has gathered steam in recent days. France asked for assurances on jobs, board representation and the role of Senard, 66, who would be chief executive officer of the combined company.

Renault’s board on Tuesday adjourned without taking action on the proposal, saying it needed to study the draft in detail.

Nissan, which isn’t part of the Fiat deal, has withheld its support. Its representatives to the French carmaker’s board were set to abstain, according to people familiar with the matter, despite Senard’s desire to win at least conditional backing from the Japanese manufacturer.

Some investors have also voiced doubts. Paris-based activist investment manager CIAM, in a letter to Renault’s board, said the merger with Fiat significantly undervalues Renault and that a 2.5 billion-euro ($2.8 billion) dividend set to go to Fiat Chrysler shareholders should instead be paid to the French company. </s> MILAN — Fiat Chrysler's proposal to merge with French rival Renault has industry executives, analysts and union leaders rushing to figure out how it would reshape the sector worldwide.

A deal would create the third-largest automaker with annual sales of 8.7 million vehicles, behind Volkswagen and Toyota. It would be a bold step in the industry consolidation that many see as necessary in the capital-hungry sector, which Fiat Chrysler Automobiles says would create 5 billion euros ($5.6 billion) in savings.

Yet, while Renault has indicated it is open to talks, the plan faces hurdles and questions, including where savings - and perhaps even job cuts - will come from.

Here's a look at the proposed deal.

Fiat Chrysler made public its plan on Monday, and is awaiting a response from Renault. The Renault board met Monday to discuss what they termed "a friendly offer." The French government holds a 15% stake in Renault, and will have a say in the outcome.

Renault's board will hold a new meeting early next week to decide on whether to say yes or no to the proposal. A "yes" would open the way for a non-binding memorandum of understanding to open exclusive merger negotiations with Fiat Chrysler. The ensuing process would involve consultations with unions, the government, antitrust authorities in all relevant jurisdictions, as well as other regulators. It would take about a year.

One particular impact a deal could have is on Renault's existing alliance with Japanese partners Nissan and Mitsubishi.

Questions over the future of that alliance have grown since the criminal investigation into the former head of Renault and Nissan, Carlos Ghosn, who denies wrongdoing. Ghosn intended to merge the two, but industry analyst Ferdinand Dudenhoeffer says the deal had little appeal for the Japanese. He noted that Renault's sales represented just 36% of alliance sales - and the Japanese didn't want to see the French carmaker drive a merger with those numbers.

It is unclear whether they would be amenable to a bigger tie-up, adding Fiat Chrysler to the mix.

Renault Chairman Jean-Dominique Senard is in Tokyo on Wednesday for a monthly meeting of Renault-Nissan-Mitsubishi management, where he will discuss the merger proposal with his Japanese partners. The French Union CGT union has warned that the biggest risk of the proposed merger between Renault and Fiat Chrysler is "to declare war on Nissan-Mitsubishi," due to their apparent resistance to full mergers.

The deal makes a lot of sense strategically: Renault is strong in Europe, Fiat Chrysler in North America; Renault's focus is passenger cars and Fiat Chrysler's is in SUVs and big trucks, while it works to boost its Italian luxury marquees Maserati and Alfa Romeo.

Renault, critically, has electric and hybrid technology that Fiat Chrysler lacks. Through Nissan-Mitsubishi, a foothold in Asia, where Fiat has struggled, would give an expanded alliance even stronger appeal for Fiat.

And both automakers need to make serious investments to develop new driving technologies, like autonomous driving.

Fiat Chrysler can flaunt the fact that it has done well merging its Italian and American sides over the past decade.

Fiat's late CEO Sergio Marchionne, a master dealmaker, sealed an agreement with U.S. officials in 2009 to take over bankrupt Chrysler in exchange for small-car technology and managerial expertise. The deal secured Fiat's survival, with Chrysler now the carmaker's big cash machine on the strength of Jeeps SUVs and Ram trucks. Marchionne died unexpectedly last July, and his successor, CEO Mike Manley, who long worked alongside Marchionne for years, has taken up the deal-making mantle along with Chairman John Elkann, heir to the Fiat-founding Agnelli family.

This could be one of the biggest hurdles.

The French government says that any deal needs to protect all French jobs and factories, and preserve Renault's existing alliance with Nissan and Mitsubishi. Italy does not hold the same sway over Fiat Chrysler, but Deputy Premier Matteo Salvini likewise says any deal must preserve Italian jobs.

Fiat Chrysler says 90% of savings would come from reducing spending on purchasing parts, and combining research and development, manufacturing and tooling. It estimates the savings would be achieved in six years.

On the one hand, Fiat Chrysler has already slimmed down since the financial crisis, combining many administrative functions following the merger. U.S. plants are running at capacity and Fiat Chrysler is looking to build a new assembly plant and retool another, regardless of the proposed merger. In Italy, it is planning investments of 5 billion euros.

But the French union CGT noted that it took 18 years for the Renault-Nissan alliance to achieve a pace of 5 billion euros per year in savings.

Charlton reported from Paris. Tom Krisher in Detroit contributed to this report.
Fiat Chrysler withdraws its merger proposal for French carmaker Renault after Renault board members were unable to reach a decision on the offer.