France under fire for collapse of proposed Renault-FCA deal
Paris blamed for failure after state stalled negotiations between carmakers
The French government came under fire on Thursday for the collapse of the proposed €33bn deal between Renault and Fiat Chrysler as recriminations flew in the wake of the sudden breakdown.
French company Renault blamed the government, which is a 15 per cent shareholder in the group, for the failure of the deal after the state stalled negotiations between the two carmakers.
FCA abruptly withdrew its merger proposal to create the world’s third-largest carmaker on Wednesday night after Renault’s board postponed for a second time a vote on pursuing the deal.
People briefed on the board delay said the French state and a union representative were the only Renault directors who indicated they would not vote for the deal. Representatives of Nissan, Renault’s existing alliance partner, abstained.
“There are still a lot of unanswered questions about last night, including the biggest one about whether the [FCA] deal is really dead. Lots of conflicting messages, but one clear consensus in Paris, Turin and Tokyo that this was the French government’s fault,” said a person briefed on the situation.
Another person added: “The second after the [French] government said they wanted to delay this again we knew FCA would walk away.”
People close to Nissan, who think the merger deal with FCA could still happen, had predicted the explosive walkout by FCA because of frictions being generated on the French side, which wanted to secure guarantees on jobs as well as governance at the new group.
The French economy minister Bruno Le Maire is travelling to Tokyo to meet his Japanese counterpart to try to smooth over relations with Nissan, which was at loggerheads with its partner over integration even before the FCA deal emerged as a runner.
Recriminations against the French government began within minutes of the announcement late on Wednesday that FCA had withdrawn its merger proposal because the Italian carmaker judged “political conditions in France do not exist currently for such a combination to proceed successfully”.
Renault said the government was responsible for a second board meeting in two days failing to agree to push ahead with the merger, which was the final straw for FCA.
The French state said it had “welcomed” the deal “openly and worked constructively with all stakeholders” and that it had simply set four conditions before it would agree to the merger.
These were that it did not weaken the alliance between Renault and Nissan, that jobs in France were preserved, that a fair governance structure between the groups was set up and that the new group take part in a European electric battery initiative.
“An agreement had been reached on three of these conditions,” said the government in a statement. “All that remained was to obtain explicit support from Nissan. The state, therefore, wanted the [Renault] board of directors to take an additional five days to ensure the support of all stakeholders.”
The state had been spurred to ask for the delay after the two Nissan representatives on the board indicated they would abstain from voting on the deal.
The relationship between the French government and Nissan has been shaken by the arrest of the former head of the alliance, Carlos Ghosn, who remains on bail in Japan awaiting trial on charges of financial misconduct, which he has consistently denied.
Mr Ghosn had been considering a full merger between Renault and Nissan before his arrest but his approach appears to have reignited old tensions between the Japanese and French sides of the alliance. Nissan fears full integration would weaken its position in the partnership.
People close to Nissan said the fact that months of merger-related talks between the heads of FCA and Renault took place without the Japanese chief executive being informed had made a mockery of claims by the French company that it would push forward with a new spirit of consensus decision-making.
“With a partner of 20 years, taking five days to convince them [Nissan] about the merger, seemed reasonable,” said a French finance ministry official. “After that it’s a question of the calendar, and we think that for an operation of this size . . . we could be allowed a small amount of time for this operation to be well considered.”
While the French government says the door to a deal “remains open,” analysts are sceptical. Renault’s shares fell 6 per cent on Thursday while FCA’s were flat.