Renault to decide on merger talks with Fiat Chrysler

PARIS: The board of French car giant Renault is expected to decide to begin merger talks with Fiat Chrysler which could create a new global giant spanning the United States, Europe and Japan.
US-Italian group Fiat Chrysler proposed a “merger of equals” with Renault last week, which has been welcomed by financial markets and has been given a conditional green light by the French government.
A merger would be “a real opportunity for the French auto industry,” Finance Minister Bruno Le Maire said of a tie-up which would bring together the flagship brands as well as Alfa Romeo, Jeep, Maserati, Dacia and Lada.
After preliminary talks over the last week, Renault directors are set to meet on Tuesday and decide whether to enter into formal discussions, which most observers expect it to do.
If combined, the two firms would produce 8.7 million vehicles a year, creating an industry powerhouse with an expected market value of some 36 billion euros ($40 billion).
But Renault already has an alliance with Japan’s Nissan and Mitsubishi, and the combined mega-group would be by far the world’s biggest, selling some 15 million vehicles, surpassing Volkswagen and Toyota, which sell around 10.6 million each.
Nissan, a long-time Renault partner, fears being sidelined by the deal and its chief executive, Hiroto Saikawa, warned that a merger “would significantly alter the structure of our partner.” Any new combination would require a “fundamental review” of their relationship, said the boss of Nissan, whose 15 per cent stake in Renault would be diluted to 7.5 per cent under the proposed deal.
Behind the scenes at the Yokohama-based firm, some executives believe the merger talks could further strain relations with Renault, which have been hit by the arrest in Japan of former CEO Carlos Ghosn, the architect of their alliance.
“It’s an ill thought-out and badly conceived plan,” one source close to Nissan said on condition of anonymity.
Renault Chairman of the board of directors Jean-Dominique Senard travelled to Tokyo last week to attempt to smooth over ties in what has been a sometimes tricky marriage between the two partners over the last two decades. — AFP