Renault’s Board Weighs Fiat Deal Despite Nissan’s Foot-Dragging


(Bloomberg) -- Renault SA’s board failed to make a decision on Fiat Chrysler Automobiles NV’s proposed merger, extending discussions for second day on a deal that would create the world’s third-largest car maker.

The directors “decided to continue to study with interest the opportunity of such a combination and to extend the discussions on this subject,” Renault said Tuesday in a statement following a meeting Tuesday to “detail the elements of the proposal.” The next meeting is scheduled for Wednesday at the end of the day, it said.

Fiat Chrysler’s proposal last week for a 50-50 combination under a Dutch holding company is designed to help the companies add scale, share costs and boost resources for tackling an expensive shift to electrification and autonomous driving. Longtime Renault partner Nissan Motor Co. has put up some resistance, while the French company’s most powerful shareholder -- the government -- has outlined a list of demands on jobs and a board seat.

Nissan CEO Hiroto Saikawa muddied the waters Monday by saying the company needs to review the future of its two-decade alliance with Renault, including contractual relationships, in light of the proposed Fiat deal. While the Yokohama-based company can’t block a Fiat-Renault combination, it could use a strong presence in China, Japan and the rest of Asia, as well as an electric-car technology, as leverage.

French Finance Minister Bruno Le Maire has also said he wants any combination with Fiat to come within the framework of the Franco-Japanese alliance, which also includes Mitsubishi Motors Corp. The government has also demanded guarantees on French jobs, industrial sites, board room representation and participation in a European electric vehicle battery project.

Under terms of the proposal, Renault shareholders would get an implied premium of about 10%, while Fiat owners would get dividends to account for its higher equity value.

Renault shares rose 4.3% in Paris, while Fiat climbed 3.9% in Milan, giving the firms a combined market capitalization of about 35 billion euros ($39 billion).

The relationship between Renault and Nissan has been strained by the fallout from the arrest of their former chairman, Carlos Ghosn, in November. Mitsubishi Chairman Osamu Masuko has said he would need more time to determine the benefits, if any, for the Japanese automaker of the Renault-Fiat merger.

©2019 Bloomberg L.P.

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