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Fiat Chrysler has made a "transformative" merger proposal for French carmaker Renault, the Italian firm said on Monday.

The combined business would be 50% owned by Fiat shareholders and 50% by Renault stockholders.

The carmaker said the merger would create a global automotive leader, with 8.7 million vehicle sales.

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

Shares in both companies rose strongly following the announcement.

In a statement, Fiat Chrysler (FCA) said the planned merger would create a "world leader in the rapidly changing automotive industry with a strong position in transforming technologies, including electrification and autonomous driving".

Fiat said that if the firms' 2018 financial results were totted up, the combined company's annual revenues would be nearly €170bn (£149.6bn; $190.5bn), with operating profit of more than €10bn and net profit of more than €8bn.

No plant closures would be caused as a result of the tie-up, the carmaker said.

Robotics sale

It will aim to save €5bn a year by sharing development costs on technology such as electric vehicles and self-driving cars.

It is thought some managerial positions may be lost, but the companies will be keen to show that production-line jobs are being preserved.

Image copyright Getty Images

The new company will be based in the Netherlands and will be listed on the Milan, Paris and New York stock exchanges.

To make the merger one of equals, the slightly-wealthier FCA will pay a special dividend of €2.5bn and sell its Comau robotics business.

The proposal will be considered by the Renault board. Who will lead the new entity and what it might be called are not yet decided.

New competitors

If the plan goes ahead, Nissan and the French government will own about 7.5% apiece of the new, merged company.

The French government favours the merger but wants more details before giving its final approval, a spokeswoman said.

The Italian government may want to acquire a share of the new firm to balance France's stake, said a politician from the Northern League, the country's largest party, according to Reuters.

By sales, the new company will be number four in North America, number two in the region which covers Europe, the Middle East and Africa and the biggest in Latin America.

Image copyright Getty Images Image caption Carlos Ghosn is awaiting trial following his fourth arrest

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.

Renault already has an alliance with Japan's Nissan, in which research costs and parts are shared. The companies own shares in each other, too. Renault owns 43.4% of Nissan's shares and Nissan owns 15% of Renault.

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.

New entrants in the motoring sector such as Tesla, as well as cash-rich companies developing driverless technology such as Amazon and Google-owned Waymo, are putting pressure on older and often heavily indebted carmakers to keep up. </s> 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> PARIS — Renault looks set to say “yes” Tuesday to a merger with Fiat Chrysler, in a deal that could reshape the global auto industry as carmakers race to make electric and autonomous vehicles for the masses.

France and Italy are both painting themselves as winners in the deal, which could save both companies 5 billion euros ($5.6 billion) a year. But workers worry a merger could lead to job losses, and analysts warn it could bog down in the challenges of managing such a hulking company across multiple countries.

The big loser may end up being Japan’s Nissan, whose once-mighty alliance with Renault and Mitsubishi is on the rocks since star CEO Carlos Ghosn’s arrest in November.

Renault SA’s board is meeting Tuesday afternoon at its headquarters in Boulogne-Billancourt outside Paris to decide whether to accept Fiat Chrysler Automobiles’ bold merger offer of last week.

A “yes” by Renault would open the way for a non-binding memorandum of understanding to start exclusive merger negotiations. The ensuing process — including consultations with unions, the French government, antitrust authorities and other regulators — would take about a year.

A merger would create the world’s third-biggest automaker, worth almost $40 billion and producing some 8.7 million vehicles a year. That’s more than General Motors makes, and trails only Volkswagen and Toyota.

If the merged company were to include the Nissan-Mitsubishi alliance too, they’d be the No. 1 car producer in the world.

But Nissan wasn’t consulted on the potential deal, and had resisted Ghosn’s idea of a full merger with Renault before his arrest. Ghosn denies accusations of financial wrongdoing.

The French government, which owns 15% of Renault, has held talks with Renault and Fiat Chrysler Automobiles in recent days, and a government official told The Associated Press that the “dynamic is positive” and the merger “makes sense.”

The official, who spoke only on condition of anonymity in line with government policy, said the merger would produce a Netherlands-based holding company with potential operational headquarters in the Paris suburb of Boulogne-Billancourt — Renault’s home base.

The French government is insisting that any deal preserve French jobs and research and development sites, and a balance between both parties.

But the French official said it generally welcomes the deal as a win for both Renault and Fiat Chrysler, because each has strengths the other lacks.

Italian Deputy Premier Luigi Di Maio is closely following the potential merger, and said in a Facebook message Monday that it would bring “a significant added value to Italy” and he “sees our country as one of the protagonists.”

He said he took for granted that the deal would protect workers. Di Maio comes from the Naples suburb of Pomigliano, where Fiat has been building the Panda and which is slated to build a new Alfa Romeo SUV under longer-term plans to transform Italian plants to higher-margin premium vehicles.

The merger would be a bold step in the industry consolidation that many see as necessary in the capital-hungry sector.

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.

Fiat has merger experience in the past. It 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.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. </s> PARIS (AP) — Fiat Chrysler is proposing a merger with French carmaker Renault aimed at saving billions of dollars for both companies.

Fiat Chrysler Automobiles said in a statement Monday that the merged company would be 50 percent owned by FCA shareholders and 50 percent by Renault shareholders.

Renault's board is meeting outside Paris on Monday morning about the possible merger.

The companies have been in discussions for weeks, as major world carmakers seek ways to save money amid the huge costs of pivoting the industry to electric and autonomous cars.

Renault is already in an alliance with Japan's Nissan and Mitsubishi, but the partnership has been troubled since the November arrest of joint chief Carlos Ghosn.

The French government, which owns 15 percent of Renault, is cautious about the new merger idea. </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> 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. </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 (AP) — Fiat Chrysler on Monday proposed a merger with French carmaker Renault aimed at saving billions of dollars for both companies as the industry pivots to electric and autonomous vehicles.

The merged company would be the world's No. 3 automaker and be 50 percent owned by FCA shareholders and 50 percent by Renault shareholders, Fiat Chrysler Automobiles said in a statement Monday.

The companies have been in discussions for weeks.

Renault's board is holding a special meeting outside Paris on Monday morning about the merger idea. The company wouldn't comment on the proposal until after the meeting, and it's unclear what the merger would mean for Renault's existing alliance with Japan's Nissan and Mitsubishi.

The statement says the merged company would produce 8.7 million vehicles annually and save 5 billion euros for the companies each year by sharing research, purchasing and other activities. It said the deal would involve no plant closures, but didn't address potential job cuts.

The Renault-Nissan-Mitsubishi alliance has been troubled since the November arrest of its boss and biggest champion, Carlos Ghosn, on financial misconduct charges in Japan. Together, the three companies are the biggest maker of passenger cars in the world.

The French government, which owns 15% of Renault, is cautious about the new FCA merger idea.

A French official said Sunday that the state will only agree to a merger if it makes sense for jobs and France's national interests. The official told The Associated Press that Japanese authorities have also been informed, and that France would prefer a tie-up within the existing Renault-Nissan-Mitsubishi alliance. The official wasn't authorized to be named.

Nissan Motor Co. Chief Executive Hiroto Saikawa wouldn't comment directly on the idea of a Renault-FCA merger but said, "I am always open to exchanging constructive views on strengthening the alliance." He was shown speaking to reporters on Japan's Fuji TV news.

Collaboration between automakers has taken on importance in recent years as they seek to build their technological capabilities in pursuit of electrical vehicles, net connectivity and artificial intelligence for vehicles. Automakers are also under pressure from regulators, particularly in Europe and China, to come up with electric vehicles so they can meet tougher pollution limits.

During an earnings conference call earlier this month, FCA CEO Mike Manley told shareholders that he believed that there would be "significant opportunities" in terms of strategic partnerships or alliances in the next two or three years.

Manley also told analysts that Fiat was taking action to address weaknesses in Europe.

AP Business Writer Yuri Kageyama in Tokyo contributed to this report. </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.
Italian firm Fiat Chrysler proposes a merger with French carmaker Renault. The new company will be based in the Netherlands and will be listed on the Milan, Paris and New York stock exchanges.