Renault Chairman Laments Loss of Fiat Deal Amid Broken Nissan Alliance

(Bloomberg) -- Renault SA Chairman Jean-Dominique Senard kept the door open for a future tie up with Fiat Chrysler Automobiles NV, telling shareholders that work must first be done to repair a broken relationship with partner Nissan Motor Co.

Senard, 66, used Renault’s annual meeting in Paris on Wednesday to give his own version of tumultuous events over the past weeks that have placed unprecedented strain on its two-decade alliance with Nissan. He also went on the offensive against the French state -- Renault’s most powerful shareholder -- over the collapse of talks with Fiat to create the world’s third-largest automaker.

“This project remains, in my head, absolutely remarkable and exceptional,” Senard said. “Frankly, I am saddened.”

Senard was brought in by the government in January to patch up relations with Nissan after the arrest of his predecessor, Carlos Ghosn, on charges of financial crimes in Japan. Nearly five months later, detente with the Japanese automaker appears further from his reach, making an eventual deal with Fiat even more elusive because of demands from France that Nissan be on board.

‘European Champion’

Speaking to shareholders on Wednesday, Senard described his deep disappointment at the failure of the Fiat project, saying the combination would have generated positive synergies and value rarely seen in any other industry merger, and without human costs. The deal was made all the more compelling, he said, because of potential rapid inroads by Chinese car manufacturers into the global marketplace.

“It was the first time there was a chance to create a European champion at a time when people keep complaining that it doesn’t exist,” he said. “This was a perfect example for France, for Renault and Europe to prove that we can do something together.”

He placed the blame for the derailing squarely with the French government, and noted ironically that it was Finance Minister Bruno Le Maire who first “suggested” Renault approach Fiat “a few months ago.”

“We were captivated by this project,” he said, adding that he didn’t know whether it can be revived in the future.

The downfall of Ghosn on charges he denies has had profound effects on both Renault and Nissan, serving to exacerbate a climate of mutual suspicion between the carmakers. As head of Renault, Nissan and the third partner, Mitsubishi Motors Corp., Ghosn held unusual powers that helped hold the alliance together.

Fallout from the Ghosn affair “left the alliance more damaged than what was initially apparent,” Senard said Wednesday. The partnership “is making a new beginning that needs to be confirmed.”

At the heart of the problem is a lopsided shareholding arrangement and a 2015 agreement on governance that is open to interpretation. Renault owns 43% of the Japanese carmaker with voting rights, while Nissan has a 15% stake in Renault, stripped of votes. The 2015 accord, known as RAMA, limits the French carmaker’s influence at Nissan.

Senard on Wednesday also sought to explain why he has threatened to block critical governance changes at Nissan, a move that has the potential to tear apart the partnership, saying the curbs on Renault’s power isn’t normal.

‘Start a War’

The modifications wouldn’t provide Renault Chief Executive Officer Thierry Bollore the same representation on Nissan’s board committees as Nissan-nominated directors have on committees of the French carmaker’s board.

“We’re not asking for more than this,” he said. “It’s not a reason to start a war.”

Nissan is “trying hard” to make progress in reaching a common understanding with Renault, CEO Hiroto Saikawa said in a late-night interview Monday.

To contact the reporters on this story: Ania Nussbaum in Paris at anussbaum5@bloomberg.net;Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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