Fiat eyes Renault in €32bn mega deal

US-Italian car maker Fiat Chrysler has made an all-share merger proposal to French rival Renault as part of a new wave of consolidation in the car industry.

Fiat eyes Renault in €32bn mega deal

US-Italian car maker Fiat Chrysler has made an all-share merger proposal to French rival Renault as part of a new wave of consolidation in the car industry.

Together they would have a combined market capitalisation of more than €32bn and total global sales of 8.7 million vehicles. By comparison, the Volkswagen Group delivered 10.9 million vehicles in 2018.

Including Nissan, which has an existing partnership with Renault, the alliance could become the world’s No 1 car maker with 13.8 million in annual sales.

It would also maintain a foothold in China, where both Fiat Chrysler and Renault are marginal players.

If it goes ahead, the €31bn-plus tie-up would alter the landscape for rivals including General Motors and Peugeot maker PSA, which recently held inconclusive talks with Fiat Chrysler, and could spur more deals.

Renault said it was studying the proposal from Fiat Chrysler with interest, and considered it friendly.

Shares in both companies jumped more than 10% as investors welcomed the prospect of an enlarged business aiming for €5bn in annual savings.

A deal would be the fourth time in 20 years that the former Chrysler of Detroit would have transferred to new owners.

In 1987, Chrysler, under Lee Iacocca, agreed to buy Renault’s 46% stake in Jeep parent AMC, and later acquires all of AMC and begins expanding the Jeep brand.

Over a decade later, German car maker Daimler and Chrysler announced a “merger of equals,” which soon becomes a Daimler takeover.

The blockbuster deal soured quickly as the US car market slowed.

In 2004, Sergio Marchionne took over as chief executive of Fiat.

Daimler then agreed to sell 80% of Chrysler to Cerberus, the US vulture fund, but in 2009 Chrysler entered bankruptcy restructuring in the US, and Fiat took control of the company, which was renamed Fiat Chrysler Automobiles, or FCA.

In 2015, the French state increased its Renault stake to 19.7%, in a deal designed to block efforts by Nissan to increase its influence over Renault.

The deal was orchestrated by economy minister - and now French president - Emmanuel Macron.

In September 2015, Mr Marchionne emailed General Motors asking to explore a combination of the two car makers and is rebuffed.

Last year, Fiat Chrysler revealed Mr Marchionne died from complications in the wake of surgery.

In January, Renault said Carlos Ghosn has resigned as chairman and CEO while he faces a financial misconduct probe.

And in March, new Fiat boss Mike Manley said Fiat Chrysler is open to pursuing merger opportunities.

Reuters

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