Carmakers FCA and Renault to go public on tie-up talks

Carmakers FCA and Renault to go public on tie-up talks

Fiat Chrysler Automobiles NV proposed a merger with Renault SA to create the world's third-biggest carmaker as manufacturers scramble for scale to tackle an expensive shift to electrification and autonomous driving.

As part of the proposal, each of the companies would own 50% shares of the combined business. Carmakers are being pushed by regulators to develop electric vehicles to lower emissions.

The biggest question remaining is whether Nissan - and its more than 20-year partnership with Renault - will elect to join the potential merger, and in what capacity.

The merger idea is the biggest corporate move so far by Fiat Chrysler CEO Mike Manley, who took his position after the unexpected death of the charismatic leader Sergio Marchionne a year ago.

"It's an ill thought-out and badly conceived plan", fumed one source close to Nissan, who did not wish to be identified, in response to the Fiat-Chrysler "50/50" merger proposal that would potentially create the world's third-largest carmaker.

France's influential CGT union warned against cuts should a deal go through, and said it wants the French government to retain a blocking stake in any new company.

A source said earlier an announcement from Italo-American FCA could provide some concrete although initial details but added the situation was still "fluid".

Nissan isn't involved in talks between the two European vehicle companies and doesn't view an extensive deal between them as a positive development, people with knowledge of the matter said.

Fiat Chrysler's offer comes at a key moment for Renault.

A deal would do little, however, to address both firms' limited presence in China, the world's biggest auto market. Judging by what FCA is saying, Nissan, as a partner for Renault, will also be involved in the new company.

FCA's portfolio includes Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia, Maserati and Ram Trucks, with Ferrari having been spun off from the group in 2016. Fiat Chairman John Elkann would likely stay in that role while Renault Chairman Jean-Dominique Senard would be chief executive officer, the people familiar with the proposal said. Hurt by slumping US sales, aging vehicle models and an out-of-sync product cycle, the automaker issued an outlook for weak operating profit and cut its dividend for the first time in a decade.

In contrast, Renault is an electric-car pioneer with relatively fuel-efficient engine technologies and a strong presence in emerging markets including Russian Federation, but it has no presence in North America.

Since arrested and accused financial misconduct, Carlos Ghosn was the architect of the successful Renault/Nissan/Mitsubishi alliance.

FCA and Renault have a combined market capitalization approaching 33 billion euros (37 billion US dollars) and total global sales of 8.7 million vehicles.

FCA said there will be no plant closures as a result of the consolidation. PSA, widely seen as an industry consolidator, was off 3%. Nissan and affiliate Mitsubishi would also benefit from 1 billion euros in cost and investment savings, it added.

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