FCA and Renault to become public in potential context

  FILE PHOTO: FIAT car manufacturer's logo is seen on a steering wheel in Cairo
FILE PHOTO: The logo of the FIAT car manufacturer is seen on a steering wheel in Cairo, Egypt, May 19, 2019. Picture taken May 19, 2019. REUTERS / Mohamed Abd El Ghany / Filfoto

26. May 2019

By Giulio Piovaccari and Laurence Frost

MILAN / PARIS (Reuters) – Fiat Chrysler and Renault are set to confirm talks on potential bindings on Monday, with the board of the French automaker calling for an early morning meeting to discuss the situation.

It comes after the news broke over the weekend that two of the world's leading car companies are negotiating for a comprehensive global

Press for consolidation among automakers has grown with the challenges of electrification, austerity, and expensive new technologies developed for connected and autonomous vehicles.

Earlier this year's FCA leader John Elkann ̵[ads1]1; a member of Italy's Agnelli dynasty who controls the company – underlined the family's commitment to the automotive industry. But he also added that they were prepared to make "bold and creative decisions" to help build a solid and attractive future for the company.

A source said that an announcement from the Italian-American FCA could provide something concrete, although the first details but added The situation was still "fluid".

A separate source of direct knowledge of the situation confirmed that the Renault board meets Monday morning at 0800 local time (0600 GMT) to discuss the issue.

The meeting was first reported by the French newspaper Le Figaro.


FCA has a very profitable North American RAM truck business and Jeep brand, but has lost money in Europe, where it can also be difficult to keep up with threatening emissions of carbon dioxide emissions.

However, Renault is a pioneer with electric car with relatively fuel-efficient engine technology and strong presence in emerging markets, but no US business.

Any connection would also y face political and labor barriers, especially in Italy. However, most of the FCA's European plants run below 50 percent capacity.

A connection between FCA and Renault would not rule out a consolidation of Renault's alliance with Japanese automaker Nissan, a source of Reuters on Saturday.

The Renault-Nissan partnership, backed by cross-divisions, has been strained by the scandal about former President Carlos Ghosn, who was exterminated after the arrest last year.

Speculation about the future of Fiat Chrysler, often seen as a potential M&A target, intensified after the sudden death of former CEO Sergio Marchionne nearly a year ago.

Last October, immediately after three months, he was picked to replace Marchionne, new Managing Director Mike Manley decided to sell FCA's Enclosure Magneti Marelli to Japan's Calsonic Kasnsei, owned by US private equity firm KKR.

Sales were completed early in the month for 5.8 billion euros.

According to reports earlier this year, the manufacturer had also started talks with France's PSA group – which has been a recurring theme over the years.

Fiat Chrysler and Renault together would have a combined market value approaching 33 billion euros ($ 37 billion) and total global sales of 8.7 million cars.

A tie-up that included Nissan would pay tribute to the ensemble of the rank of worldwide No.1 car manufacturer with 13.8 million annual sales. It will also maintain a foothold in China, where both FCA and Renault are marginal players.

(Reporting by Laurence Frost, Gilles Guillaume and Inti Landauro in Paris, Pamela Barbaglia in London and Giulio Piovaccari in Milan; Editing Keith Weir)

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