The merger between Fiat Chrysler Automobiles and Renault will not happen anytime soon — and could even be dead forever.
While the blaming could continue for a while — with FCA and Renault aligned in blaming the French government for the breakup of talks and the French government blaming FCA for the abrupt withdrawal of its offer — one thing is clear: No one in this trio could feel like a winner.
FCA's overture for a 50-50 merger, which would have created the world's third-largest automaker with 8.7 million units sold in 2018, came at the right time, when consolidation to face growing investments in electrification was more needed than ever. So FCA saying that it "will continue to deliver on its commitments through the implementation of its independent strategy" simply contradicts the logic that demanded a merger it was calling "transformational."
Everything started so smoothly on the Renault side. The French automaker had welcomed FCA's "amicable" offer. Chairman Jean-Dominque Senard met with French officials ahead of FCA's offer and seemed to have received the green light. Renault's board was reportedly ready to approve the deal on the evening of Wednesday, June 5 — until suddenly 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 board meeting."
That's indeed a strong statement when the French state is the company's largest shareholder, with 15 percent of the shares and 28.7 percent of voting rights.
The French state wanted to underline that nothing that could potentially hurt France could happen to a French company. While this a typical populist call, it clashed with the government's initial enthusiasm for a merger that could create a "European champion."
The French state pushed so hard to secure corporate-governance and long-term job protections that the Italian-American counterpart simply walked away. As FCA Chairman John Elkann wrote to his employees, the discussions had been taken "as far as they can reasonably go."
Nissan, despite not being directly involved in the negotiations, seems to be the only one to benefit from calling it off.
A Renault merged with FCA could have forced a rebalancing of the Renault-Nissan-Mitsubishi Alliance that tilted to the French side. Nissan, which already considered French influence on the alliance to be too much, has to be relieved.
Curiously, Renault and the French state have different perceptions of Nissan's stance on the proposed merger: Renault saw support; France saw resistance.
Finance Minister Bruno Le Maire said Thursday that the French government had engaged constructively but failed to win Nissan's support: "An agreement had been reached on three of the four conditions. What remained to be obtained was the explicit support of Nissan," Le Maire said.
Renault followed with an alternative view: "We are gratified by the constructive approach of Nissan."
Nissan CEO Hiroto Saikawa delivered his own sibylline — prophetic, mysterious — message: "I welcomed the broadening of the alliance's opportunities, and I still feel that way."