Renault and Fiat Chrysler merger proposed

  • Fiat Chrysler proposed to merge with Renault, a move that would create the third largest automaker in the world.
  • Renault's board said it would study the proposal "with interest".
  • The move comes after Renault's plans to merge with Nissan were tracked by the numerous accusations of Nissan leader Carlos Ghosn.

Fiat Chrysler proposed to merge with France's Renault on Monday. The move would create the world's third largest automaker and save billions of dollars needed to invest in the race to create new electric and autonomous vehicles.

The merged company would produce 8.7 million cars a year, leapfrogging General Motors and only subsequent Volkswagen and Toyota. Shares in both companies skipped 1[ads1]0% on the news of the offer, which would see that each and every shareholder splits ownership in the new manufacturer.

Renault welcomed the idea. The company's board met on Monday at its headquarters in Boulogne-Billancourt outside Paris to discuss the proposal and afterwards said that Renault will study it "with interest". In a statement, Renault said such a merger could "improve Renault's industrial footprint and be an added value generator for the Alliance" with Japan's Nissan and Mitsubishi.

Fiat Chrysler offers a key figure for Renault. The French manufacturer had eventually wanted to merge with Nissan, but these plans were tracked by the arrest of chief Carlos Ghosn on economic default charges in Japan.

Former Nissan chairman Carlos Ghosn released on bail

Now, issues are growing over the Renault-Nissan-Mitsubishi Alliance, which is the world's largest producer of passenger cars. While Fiat Chrysler says the merger with Renault would accommodate the alliance, it is unclear how Japanese companies can react in the longer term to be associated with a much larger partner.

A merger would save 5 billion euros (5.6 billion euros) for the two companies each year by sharing research, purchasing costs and other activities, said Fiat Chrysler in a statement. It is said that the agreement would not involve any closure of the facility, but it did not apply to possible work reductions.

Companies are somewhat complementary: Fiat Chrysler is stronger in the US and SUV markets, while Renault is stronger in Europe and on the development of electric vehicles. Together they will be worth almost 40 billion euros.

The French government, which owns 15% of Renault, is "beneficial" to the idea of ​​a merger with Fiat Chrysler, but wants to study the conditions more closely, especially with regard to "Renault's industrial development" and the employees' working conditions. said Prime Minister Sibeth Ndiaye on Monday.

Such a merger would show "our ability to respond to challenges in European and French sovereignty in a globalized context," she said. "We need giants to build in Europe."

France's influential CGT union warns against job cuts in a merger, saying it wants the French government to retain a blocking stake in a new company.

Italian officials were open to the agreement. Matteo Salvini, head of rightwing populist party and deputy, said that "if Fiat is growing, it's good news for Italy and Italians," even though he warned that an agreement would protect "every single job."

Investors accepted the proposal, equities in Fiat Chrysler pushed up 10% and Renault 14% in European trade.

Nissan Motor Co., CEO Hiroto Saikawa did not want to comment directly on the idea, but said, "I am always open to exchanging constructive views on strengthening the alliance." He was shown to talk to reporters on Japan's Fuji TV news.

Fiat Chrysler estimated that Nissan and Mitsubishi would save $ 1 billion in savings a year from the deal.

Cooperation between automakers has taken importance in recent years as they seek to build their technological capabilities in the search for electric vehicles, network connectivity and artificial intelligence for vehicles. Car manufacturers are also under pressure from regulators, especially in Europe and China, to come up with electric vehicles so they can meet tougher pollution limits.

During an earning conference call earlier this month, Mike Manley, CEO of Fiat Chrysler, said he believed there would be "significant opportunities" in strategic partnerships or alliances over the next two or three years.

Manley said Fiat Chrysler was taking action to tackle Europe's weaknesses.

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