In Chrysler, France May Be Served a Slice of Corporate Americana
(Bloomberg) -- Chrysler has bounced around between different owners for the better part of two decades. Next up: the French government.
If a board meeting slated for Tuesday goes according to plan and seals the merger between Fiat Chrysler Automobiles NV and Renault SA, the French government will end up owning a 7.5% sliver of the combined group. And while there are plenty of French companies owning U.S. household names -- think luxury house LVMH or advertising giant Publicis Groupe SA -- the involvement of the state in a storied U.S. consumer brand is still an unusual corporate development.
That the French government would ascend to a stakeholder in Chrysler is testament to the twists and turns that have characterized the U.S. carmaker’s winding corporate road, as well as France’s long history as a Renault shareholder. Founded in 1925, Chrysler ascended to the Big Three that dominated American roads for decades, though it’s long been the scrappy player trailing behind General Motors and Ford Motor.
Germany’s Daimler AG bought the company in 1998, only to unceremoniously divest less than a decade later amid mounting losses. Following the global recession, Chrysler combined with Fiat SpA, which has managed to turn the business around.
Among the company’s stable of products is the Jeep, which has a cult following among U.S. consumers and dates back to World War II, when the U.S. government solicited bids for a four-wheel drive vehicle to ferry soldiers over rugged European terrain. Chrysler’s lineup also includes Ram pickup trucks and Dodge Charger and Challenger muscle cars that have graces American garages for decades.
In the past, Chrysler churned out oversize, gas-guzzling LeBaron sedans and Plymouth station wagons. In many ways, that history runs counter to France’s auto industry, which built a reputation for zippy and quirky cars like the Citroen DS, Renault R4 and Espace or the Peugeot 504, a rugged and boxy station wagon popular in far-flung places like Africa.
Under the 34 billion-euro planned Franco-Italian deal, the French state’s 15% stake in Renault will be cut in half. While that might sound like a diminished role, French Finance Minister Bruno Le Maire is still pushing for guarantees on French jobs and factories, as well as future influence. Paris is also pressing for boardroom representation along with operational headquarters for the combined company in France and the nomination of Renault Chairman Jean-Dominique Senard as chief executive officer for four years, Bloomberg News has reported.
U.S. President Donald Trump has been mum about the potential deal. The “America first” leader has been a cheerleader for Detroit’s carmakers, with the exception of when they’ve closed plants or plotted investments in Mexico. He cheered Fiat Chrysler earlier this year for adding jobs in Michigan, but the company continues to operate several factories south of the border and recently cut a shift of workers at a plant in Illinois.
If the Renault board gives the green light to the deal, Jeep and Ram would become part of a broad mix of brands and nameplates, ranging from Italian marques Maserati and Alfa Romeo to the diminutive Fiat 500 and compact Renault Clio. Fiat’s founding shareholder, the Agnelli family’s holding company Exor NV, would be the single largest investor.
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