FCA Has Submitted A Proposal For A Merger With Renault: Combined business to be 50% owned by FCA shareholders and 50% by Groupe Renault shareholders – Combination would create the 3rd largest global OEM with 8.7m vehicle sales
Fiat Chrysler Automobiles N.V. has today delivered a non-binding letter to the Board of
Groupe Renault proposing a combination of their respective businesses as a 50/50
The FCA proposal follows initial operational discussions between the two companies to
identify products and geographies where they could collaborate, particularly as they
develop and commercialize new technologies. These discussions made clear that broader
collaboration through a combination would substantially improve capital efficiency and the
speed of product development. The case for combination is also strengthened by the
need to take bold decisions to capture at scale the opportunities created by the
transformation of the auto industry in areas like connectivity, electrification and
The proposed combination would create a global automaker, preeminent in terms of
revenue, volumes, profitability and technology, benefitting the companies’ respective
shareholders and stakeholders. The combined business would sell approximately 8.7
million vehicles annually, would be a world leader in EV technologies, premium brands,
SUVs, pickup trucks and light commercial vehicles and would have a broader and more
balanced global presence than either company on a standalone basis.
The benefits of the proposed transaction are not predicated on plant closures, but would
be achieved through more capital efficient investment in common global vehicle platforms,
architectures, powertrains and technologies. FCA has a history of successfully combining
OEMs with disparate cultures to create strong leadership teams and organizations
dedicated to a single purpose. Therefore, FCA’s Board strongly believes that this
combination, which would have the scale, expertise and resources to navigate the rapidly
changing automotive industry, would create new opportunities for employees of both
The alliance is expected to focus on sharing electric-vehicle technology and autonomous driving technology, as well as moving into purchasing, logistics and vehicle platform sharing.
“Joining the Renault-Nissan-Mitsubishi in some way makes some sense for the Alliance, but it’s not clear what Renault has that FCA wants other than scale,” says Kristin Dziczek, Vice President of Industry, Labor & Economics at the Center for Automotive Research. Both FCA and Renault have a lot of redundancy in small cars in the European Union and South America with little strength in China, added Dziczek.
Combining the businesses will bring together complementary strengths. The combination
would create a brand portfolio that would provide full market coverage with a presence in
all key segments from luxury/premium brands, such as Maserati and Alfa Romeo, to the
strong access brands of Dacia and Lada, and would include the well-known Fiat, Renault,
Jeep and Ram brands as well as commercial vehicles. Groupe Renault has a strong
presence across Europe, Russia, Africa and Middle East, while FCA is uniquely
positioned in the high margin segments in North America and is a market leader in Latin
America. FCA’s evolving capability in autonomous driving, which includes partnerships
with Waymo, BMW and Aptiv, is complemented by Groupe Renault’s decade of
experience in EV technology where it is the highest selling EV OEM in Europe. Groupe
Renault also has a well-established and profitable financing business (RCI Banque).
While the proposal focuses on a combination of FCA and Groupe Renault, FCA looks
forward – as part of a combined enterprise with Groupe Renault – to working with Groupe
Renault’s Alliance partner companies on ways to create additional value for all Alliance
members. FCA recognizes the standing and achievements of Groupe Renault’s partners
and sees significant expected benefits to all parties from the expanded partnership. The
FCA and Groupe Renault combination together with its Nissan and Mitsubishi partners
would be the largest global OEM alliance, selling more than 15 million vehicles annually.
The additional synergies stemming from the merger of FCA and Groupe Renault that are
expected to accrue to Nissan and Mitsubishi purely as members of the Alliance are
estimated to be worth an incremental €1 billion annually
This proposal offers the opportunity to create the #3 global automotive company with
broad, complementary and strong brand and geographic presence and important
strengths in transforming technologies. It also confirms and enhances the value of the
existing Alliance and its potential to become even stronger in the future. While there is no
certainty that this proposal will result in a transaction, the Board of FCA has strongly
supported and approved the proposal which will now be reviewed by the Groupe Renault
Board of Directors. The definitive agreements for the proposed combination are subject to
negotiation and to final review and approval by the FCA and Groupe Renault Boards.
Completion of the proposed combination would also be subject to customary closing
conditions, including approval by each company’s shareholders, as applicable, and the
satisfaction of antitrust and other regulatory requirements.
A merger with Renault has been attempted before, previously the French government stepped in and stop it from happening, quite what will happen this time round remains to be seen.