France Warms to Peugeot-Fiat Merger After Derailing Renault Deal
France Warms to Peugeot-Fiat Merger After Derailing Renault Deal
(Bloomberg) -- France may have helped scupper a deal between Renault SA and Fiat Chrysler Automobiles NV, but its approach to the marriage of Fiat with Peugeot shows it’s open for business.
“There are excellent arguments” for combining the maker of Peugeot cars PSA Group with its Italian counterpart, French prime minister Edouard Philippe said in an interview. The French company’s proposal leaves you believing “it has an opportunity to grab,” he added.
Early backing of the deal from France, which owns a 12% stake in PSA, helps clear the way for the complex negotiations needed to create the world’s fourth-largest carmaker by volume. The Franco-Italian companies plan to sign a memorandum of understanding by the end of the year, with a view to generating 3.7 billion euros ($4.1 billion) in annual savings without factory closures.
The government’s support is especially significant, considering that it hampered Renault’s attempt to get together with Fiat in June. France demanded Renault secure the backing of its Japanese partner Nissan Motor Co. before proceeding with Fiat. As a result, John Elkann, chairman of the Italian-American carmaker, abruptly walked away, blaming “political conditions in France.”
The move scarred the government, which has pledged to be less hands-on in business. France owns a 15% stake in Renault.
Industrial Footprint
While the prime minister said France will be “sensitive” to protecting France’s industrial heartland, he fell short of seeking typical job guarantees.
“What matters to me is the industrial footprint in France, and the company’s project,” Philippe said. The government previously warned it would scrutinize the job impact of the deal, without advocating for a formal commitment. “Given the synergies mentioned by management, I have high hopes that the deal should happen in excellent conditions.”
Auto manufacturers are grappling with an economic slump and a wall of investment to make low-emission cars. As they churn out more electric vehicles, whose batteries are often made in Asia and with fewer workers, the number of jobs needed in the sector could decline. Jobs have already migrated from western Europe to lower-cost countries.
To contact the reporters on this story: Ania Nussbaum in Paris at anussbaum5@bloomberg.net;Helene Fouquet in Paris at hfouquet1@bloomberg.net;Geraldine Amiel in Paris at gamiel@bloomberg.net
To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, ;Anthony Palazzo at apalazzo@bloomberg.net, Andrew Noël, Andrew Blackman
©2019 Bloomberg L.P.
