MONTH-IN-BRIEF (Jun 2019)
International M&A
Fiat Chrysler Withdraws Merger Proposal with Groupe Renault
By David Marshburn
On June 6, 2019, Fiat Chrysler Automobiles N.V. (“FCA”), an automobile manufacturer headquartered in England withdrew its offer of merger from French automaker Groupe Renault (“Renault”). Originally submitted on May 27, 2019, FCA’s proposal provided for the two automakers to merge under a Dutch parent company. Each party would have received a 50%ownership of the combined entity, with FCA stockholders also receiving a dividend of approximately $2.8 billion for purposes of mitigating the disparity in market values between the two companies. If completed, the merger would have created the world’s largest global original equipment manufacturer alliance, with the resulting combined FCA-Renault entity becoming the third largest automobile manufacturer in the world.
In a press release issued on June 5, 2019, Renault announced that representatives of the French government asked Renault to postpone its vote on the merger proposal. FCA pulled its offer the following day, expressing concerns that the political conditions in France would not allow for a successful merger of the two companies. However, the French government owns a 15% stake in Renault and dismissed FCA’s assertions, stating that the only approval that had yet to be obtained was from Nissan Motor Co., Ltd., a Japanese alliance partner of Renault. Although the reason for the breakdown in negotiations remains unclear, neither FCA nor Renault has shown any interest in renewing merger talks.
