Previously acclaimed to be one of the largest mergers in the global automobile industry, the much-touted Fiat Chrysler-Renault merger is now dead.
The merger which was estimated for a deal of $35 billion.
Two weeks ago, we reported that Fiat Chrysler offered about $35 billion to merge operations with Renault in a combination deal that has been dubbed a ‘merger of two equals.
We are now learning that Fiat Chrysler has withdrawn its offer for the bid.
According to TechCrunch which cited the Wall Street Journal, 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,” according to a company statement provided to TechCrunch. “However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
The bone of contention that led to the collapse of the merger talks was Nissan.
Based on its shareholding structure, Renault owns 43.4 percent of Nissan. Nissan owns 15 percent of Renault. It sounds confusing but it is the reality on the ground.
However, the roman between Nissan and Renault soon went sour after Renault-Nissan Alliance CEO Carlos Ghosn was arrested for fraud as well the subsequent power struggle, share vehicle parts and collaborate on technology disagreements.
As at now, there seems to be an end to a merger that could have buoyed the industry into a new era of competition.