Fiat Chrysler slams brakes on Renault merger offer AFP/Paris

June 12, 2019

Italian-American carmaker Fiat Chrysler on Thursday withdrew its blockbuster proposal to merge with Renault, blaming political objections in Paris and sparking a war of words with French officials.

Fiat Chrysler (FCA) had stunned the markets last week by proposing a 'merger of equals' with the French group that would create an auto giant spanning the globe.

The plan was welcomed by analysts as one of the few deals in the auto sector that might prove a success, given the companies' complementary range of vehicles and regional markets.

The French government, which controls 15 per cent of Renault, gave it a conditional green light but also warned against 'haste'.

In a statement issued after a board meeting on Wednesday evening, FCA said it 'remains firmly convinced of the compelling, transformational rationale' of its proposal, which it said was '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,' it added.

A source close to FCA blamed the 'sudden and incomprehensible' objections of French Finance Minister Bruno Le Maire's ministry for causing the collapse of the deal. 'New demands imposed by the French government have led to this damaging situation for all parties,' the source told AFP.

Italian Deputy Prime Minister Luigi Di Maio said: 'When politics tries to intervene in economic procedures, they don't always behave correctly, I don't want to say any more.'

But Le Maire stressed that of his conditions for the FCA alliance, only the explicit approval of Nissan remained to be secured, while aides denied that the ministry had played politics with the deal.

A source close to the finance ministry said the French government 'regrets the hasty decision of FCA'.

'From the beginning, the [French] state has wanted the necessary time to examine' the deal, the source said.

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