Renault board delays decision on Fiat Chrysler merger proposal
French automaker Renault SA's board of directors delayed a decision Tuesday on whether to approve a 50-50 merger proposal from Fiat Chrysler Automobiles NV. The board will meet again Wednesday.
"The Board of Directors has decided to continue to study with interest the opportunity of such a combination and to extend the discussions on this subject," Renault's board said in the brief statement.
In the hours before Renault's directors were set to meet, Fiat Chrysler officials reached compromises with the French government over some sticking points surrounding the merger, Reuters reported Tuesday. The French government would get one of Renault's four seats on the merged company's board, according to that report.
Renault chairman Jean-Dominique Senard would be the company's CEO, with FCA's John Elkann assuming the role of chairman, according to the report. Bloomberg reported Tuesday that the Renault directors appointed by Nissan were expected to abstain from voting, as the Japanese automaker sours on the FCA-Renault merger.
It was unclear Tuesday at what time Renault's board would meet Wednesday in Paris to continue discussing the merger. Renault is still considering the merger within a self-imposed time frame, according to Philippe Houchois, an equity analyst with Jefferies Group LLC.
"That they're delaying or waiting is well within the time frame," he said. "I wouldn't expect a decision like this to be made in one board meeting anyway. It seems like the French state might be getting one of the board seats, which I thought was a likely outcome anyway."
Tuesday's meeting came just more than a week after Fiat Chrysler presented Renault's board of directors with a 50-50 merger proposal. The deal was designed to save some $5.6 billion (5 billion euros) annually through efficiencies in manufacturing, purchasing and R&D.
FCA's proposal promised to create a new company without closing any plants. That's a feat some experts have questioned, though the French government is demanding protection for factory workers.
The potential tie-up for FCA comes as the Auburn Hills automaker's rivals General Motors Co. and Ford Motor Co. execute global restructurings designed to cut costs and divert capital toward expensive electrification, autonomy and mobility efforts. FCA is also hoping to benefit from Renault's advancements in electrification — an area in which FCA is perceived to lag.
The potential combination also comes amid deepening strains in Renault's 20-year-old alliance with Nissan and Mitsubishi Motor Corp. following charges of financial wrongdoing against longtime CEO Carlos Ghosn.
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