Fiat Chrysler share price down 1% after withdrawing Renault merger offer
Italian-American Fiat Chrysler ends its bid to buy French Renault after the two carmakers couldn't reach an agreement.
Fiat Chrysler share price dropped after the corporation ended its bid to merge with Renault. The surprise announcement from Fiat Chrysler comes just days after the automaker submitted an offer to partner with Renault.
Why did Fiat Chrysler withdraw its merger offer to Renault?
Italian-American Fiat Chrysler blamed Renault’s native French government for the deal collapse. The French government owns 15% of Renault and pushed for Fiat Chrysler to guarantee a dividend to Renault shareholders, including the government. According to sources close to Renault, the French government also wanted to delay the merger until Nissan, a member of the Renault-Mitsubishi-Nissan Alliance, approved the deal.
Fiat Chrysler confirmed the withdrawal of the merger offer in a statement and said that the French government jeopardised the potential partnership.
‘It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,’ said Fiat Chrysler.
Renault also released a statement expressing regret about the failed merger offer from Fiat Chrysler.
‘Groupe Renault expresses its disappointment not to have the opportunity to continue to pursue the proposal of FCA [Fiat Chrysler]’, said Renault.
What’s next for Renault?
The merger was supposed to combine Fiat Chrysler’s strong sales with Renault’s cutting-edge technology to create popular fuel-efficient cars. The deal would have also created the world’s third-largest automaker. The collapse of the potential merger likely hurts Renault more than Fiat Chrysler as it recovers after the arrest of former Alliance chief, Carlos Ghosn, for fraud.
While the merger talks seem to be over, Nissan chief executive officer (CEO), Hiroto Saikawa, said he is open to a union of the carmakers in the future.
‘I welcomed the broadening of the [Renault-Mitsubishi-Nissan] Alliance’s opportunities, and I still feel that way,’ said Saikawa.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
