Would FCA merge with Group Renault?
Fiat Chrysler Automobile (FCA) on Monday announced sending out a proposal to Group Renault for merger with equal 50% share in the joint entity. This comes in continuation with former FCA Chief Executive Officer (Late) Sergio Marchionne persistent effort to seal a merger deal with one of the big OEMs mainly to share cost pressure coming due to upcoming technological change like autonomous and electric vehicles. Groupe Renault has a strong presence across Europe, Russia, Africa and the Middle East, and FCA can give access to the markets in the Americas. The deal will give FCA an access to Renault’s EV technology. Group Renault is highest selling EV OEM in Europe.
If the deal move in the right direction, Groupe Renault and FCA put together would produce annually about 9 million vehicles, and rank third behind Volkswagen and Toyota. Further including Renault alliance partners Nissan and Mitsubishi the combined output would reach close to 15 million and make them world leader.
Big personalities get in the way of big merger agreements. A tie-up between Fiat Chrysler Automobiles and Renault has a better chance of succeeding than most such proposals because both companies have lost larger-than-life bosses over the past year. Fiat Chrysler Automobiles has unveiled a proposed €32.6bn all-share merger with Renault that would reshape the global automotive industry.
On May 27th FCA, an Italian-American firm, said it was seeking a merger with its French counterpart, itself in a close alliance with Japan’s Nissan and Mitsubishi. If a deal goes ahead, it will create an automotive colossus.
According to a statement from Fiat Chrysler Automobiles, the combined business would be owned 50/50 between shareholders of FCA and Groupe Renault. A board of governors would hold a majority of independent directors.
Shares in Fiat Chrysler and Renault jumped 13% and 11.5% respectively. The merger still requires approval by the boards of both automakers. Reuters reported Monday that Renault board members will meet informally within days with the intent to make a decision early next week on whether to proceed with the proposed full merger.