Renault delays decision on Fiat Chrysler marriage proposal

Image Reuters

Image Reuters

Renault directors nominated by Nissan are expected to abstain from the vote on backing further talks with Fiat, according to people familiar with the information.

Renault's board issued a press release that said simply that it 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 Council".

Fiat Chrysler's proposal last week for a 50-50 combination under a Dutch holding company is created to help the carmakers add scale, share costs and boost resources for tackling an expensive shift to electrification and autonomous driving.

This means the person representing Renault at the next Renault-Nissan-Mitsubishi operating board meeting would be the proverbial elephant in the room, as that executive may soon also be part of a powerhouse with combined global sales of 8.7 million vehicles and more than €10 billion ($11.1 billion) in operating profit in 2018.

The French carmaker's board will meet again at the end of the day Wednesday to "continue to study with interest" last week's merger proposal from Fiat Chrysler Automobiles, Renault said in a statement. Nissan opposition would also go against a French government demand that any Renault combination with Fiat remain within the framework of the existing Franco-Japanese alliance.

Should the Renault board approve the deal, the resulting company would become the third largest auto manufacturer in the world, with combined sales of around 8.7 million vehicles annually and access to almost all markets.

Nissan CEO Hiroto Saikawa cast doubt Tuesday on whether his company will be involved in a Renault-Fiat Chrysler merger - and suggested adding Fiat Chrysler to the looser Renault-Nissan-Mitsubishi alliance instead. Nissan, for example, isn't exactly thrilled with the prospect that its fellow Alliance member would merge with FCA and has been protesting.

Ghosn says the accusations of financial misconduct in Japan are politically driven by enemies at Nissan.

In this compromise, France would get one of Renault's four board seats, and FCA would retain its four independent seats.

But Nissan wasn't consulted on the potential deal and before Ghosn's arrest, resisted his idea for a full merger with Renault.

"The (French) state will hand over all the elements to the judicial authorities and there will be a complaint", Finance Minister Bruno Le Maire told BFM TV in an interview. The French carmaker's industrial assets have a negative implied value of 3 billion euros under the terms of the proposed deal.

FCA's proposal would see both companies acquired by a listed Dutch holding company owned 50-50 by current FCA and Renault shareholders, after payment of a €2.5 billion ($2.8 billion) special dividend to FCA shareholders.

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