Fiat Chrysler Automobiles (BIT:FCA)
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2 Months : From May 2019 to Jul 2019
By Nick Kostov
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 13, 2019).
PARIS -- Renault SA's chairman defended his attempt to merge the French auto maker with Fiat Chrysler Automobiles NV, criticized the French government for not backing it and said talks were pursued in the first place at the suggestion of the country's finance minister.
The revelation of the French government's early involvement in the deal is the latest twist in an already convoluted multiplayer standoff involving the two European auto makers, Renault's Japanese partner Nissan Motor Co., and the governments of France and Japan. Neither Fiat Chrysler nor Renault has ruled out resuming talks, but for that to happen a complicated set of preconditions would need to be met involving all five parties.
As Renault's Jean-Dominique Senard addressed the company's annual general meeting Wednesday, he gave no indication that steps were being taken to revive the merger bid but said the original goal was still laudable.
"There was a possibility to create a European champion at a time when we keep complaining about the lack of them," Mr. Senard said, adding that he found the state's decision not to back the project last week "regrettable."
He said it was French Finance Minister Bruno Le Maire who first prodded him to engage in talks with Fiat Chrysler.
"When the finance minister suggested to me several months ago that I enter into contact with the management of Fiat Chrysler, I did it," Mr. Senard said. "The benefits of this operation are very evident, and in my industrial life I've rarely seen a merger project that could bring so many positive synergies."
A French government official said there was no contradiction between encouraging Mr. Senard to engage with Fiat Chrysler and later asking for an extension of discussions before backing a merger. "We always said this was an opportunity, and it's still an opportunity, but a number of conditions had to be met," the official said.
Fiat Chrysler and Renault had discussed common projects for months before taking up the idea of a full-blown merger in mid-May.
Mr. Senard was appointed chairman of the French car maker in January amid the fallout from the travails of former Chairman Carlos Ghosn, who was arrested late last year in Japan on allegations of financial crimes. He denies the charges relating to his executive role at Nissan.
The French government, which has a 15% stake in Renault, said it would support the Fiat merger only if Nissan also backed it. The two auto makers have been in an alliance for two decades, but have fought openly since the arrest of Mr. Ghosn, who forged the partnership.
They have sparred over the conduct of the investigation into Mr. Ghosn's tenure at Nissan. They also have fought over the future structure of their alliance, as well as Nissan's approach to rewriting its governance and reshaping the Japanese company's board.
Nissan had indicated last week it would abstain from a vote on the Fiat-Renault merger because it needed more time to study its effects on its own operations. That stance prompted the French government to ask to delay the vote, which in turn led Fiat Chrysler to withdraw its offer.
The government of Japan hasn't played a public role in the various deliberations, but officials in Tokyo are monitoring developments related to the Renault-Nissan alliance and have in the past been influential in discussions with Nissan about its relationship with Renault. Meanwhile, officials in Paris have said the French government's priority as Renault's largest shareholder is to strengthen the alliance with Nissan.
This week, Nissan's chief executive met with an adviser for Fiat Chrysler in Japan. People close to Nissan say it now would consider backing the merger if there is an agreement in place for the combined company to reduce Renault's stake in Nissan.
Renault owns 43% of Nissan, while the Japanese auto marker owns 15% of its alliance partner through nonvoting shares.
Mr. Senard said Wednesday that Renault's role at Nissan had been vastly diminished by a 2015 agreement involving the two companies and the French state. He added that he wouldn't preside over an "extra reduction to Renault's role in the alliance, and in particular at Nissan."
Mr. Senard said the alliance between Renault and Nissan had been more damaged by what he called the "Ghosn affair" than it appeared, saying trust between the partners was "eroded."
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
June 13, 2019 02:47 ET (06:47 GMT)
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