Renault-Fiat Chrysler merger back on

The Italian media is reporting that the truncated €33 billion Renault-Fiat Chrysler Automobiles merger could be back on.

Cut short two months ago amid objections by Renault’s alliance partner, Nissan, the deal could have been given new impetus following a surprise move by the French government.

A merged Renault-FCA would control brands from Renault and Dacia to Fiat, Jeep, Alfa Romeo, RAM, Chrysler, Maserati and Lancia plus Nissan, Mitsubishi and Infiniti through Renault’s existing alliances, creating comfortably the world’s largest car-maker with about 15 million sales a year.

The French government has been public in its support of the merger and Italian business newspaper Il Sole 24 ore insists Renault could halve its shareholding in Nissan in order to gain the Japanese company’s support.

In reality, the merger negotiations never truly stopped, sources insist, though Renault said two months ago that restoring some clarity in its messy alliance with Nissan was its main priority.

Reports from Il Sole 24 ore suggest Renault has been asked by Nissan to halve its shareholding in the Japanese car-maker, which would then approve the FCA merger.

For its part, FCA has been for sale for years now, and a transalpine deal with Renault may be one of its last great hopes. It is, as they say, a motivated seller.

The original merger proposal fell through when Nissan’s representatives on the Renault board indicated they would abstain from voting on it, effectively killing it, and then the French government suggested a five-day delay. This wavering lead to FCA withdrawing the merger offer.

“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,” Senard said at the company’s annual general meeting.

“With the exception of one vote against, all members of the board enthusiastically approved that opportunity. It just turned out that representative of the French government did not see eye to eye with us.”

The Renault-Nissan alliance has been on shaky ground since the arrest of former CEO Carlos Ghosn in a move most people attribute to current Nissan CEO, Hiroto Saikawa.

Renault owns 43 per cent of Nissan and has full voting rights, while Nissan only holds 15 per cent of Renault and no voting rights – and so no control - in the French car-maker at all.

And that has long irked the Japanese car-maker that provides most of the Alliance’s cashflow.

What irked it even more was a proposed full merger with Renault – which was to have been voted on in a scheduled board meeting just days after Ghosn was arrested.

Insiders suggest that Nissan has used Renault’s desire to merge with FCA as leverage to reduce the French car-maker’s influence in Japan, despite Alliance Chairman Jean-Dominique Senard insisting repairing the Alliance was his main priority.