Will Future Negotiations save Merger Deal Withdrawn by Fiat Chrysler?
Fiat Chrysler’s recent withdrawal from its proposal to merge with French automaker Renault has imposed risks of financial losses for both the companies. The deal that would have rather reshaped the automobiles industry, bringing in advancements in the fields of electric and self-driving vehicles, is now no more valid – though analysts expect that there could be some room for discussions in the future.
Despite wide public support from the stakeholders, the companies are at a risk of losing up to 5 billion Euros a year from other collaborators following the withdrawal. The failure of Renault’s board of members to reach a conclusion on the merger deal, along with French government’s interference in postponing the vote on deal, led to situations of withdrawing the deal.
France, which has 15 percent share in the Renault, expressed its desire to support the 50-50 merger between Fiat Chrysler and Renault only if the merger supported and protected French jobs.
Speaking on the merger withdrawal, Fiat Chrysler on Wednesday said, “It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
Losses incurred due to the withdrawal deal indicate the fact that both, Renault and Fiat are no longer in a position to share cost savings with a net present value of 19 billion Euros. The stated amount has been more than half the combined market, before the merger appeared, making it apparent that John Elkann, chairman of Fiat Chrysler automobiles, lost a helping hand in the fabrication of the electric vehicles.
History denotes that Renault has not been able to maintain healthy relations with other collaborators. Like the withdrawal merger with Fiat Chrysler, the merger between Renault and Nissan Motor did not progress due to various political reasons.
Being Renault’s top stakeholder, France’s continuous pushing of the other automobile companies to bring in concessions on governance, jobs and other values, have created problems for merger with Nissan and Fiat Chrysler. Though, the French government claimed that it would make agendas market-friendly and promised privatisations, no efforts have been done on their part to make it possible.
The political conditions in France seem to be one of the major reasons behind Fiat Chrysler’s merger withdrawal step. However, there is a chance that the deal could be saved with proper negotiations from both the companies in future if France brings in friendly measures for market to advance in automobile sector.
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