Renault board examining £28bn merger proposal from Fiat Chrysler
The board of French carmaker Renault are studying a proposed £28bn merger plan put to them by American-Italian rival Fiat Chrysler (FCA) today.
The deal would create the third-largest car company worldwide behind Japan’s Toyota and Germany’s Volkswagen with sales of 8.7m per year.
Investors in both companies welcomed the proposed deal which aims to deliver €5bn (£4.4bn) annual savings.
Shares in Renault jumped nearly 15 per cent today to €57.35 while shares in FCA rose 11 per cent to €12.73.
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Renault said in a statement today: “After careful review of the terms of FCA’s friendly proposal, the board of directors decided to study with interest the opportunity of such a business combination.”
FCA's proposal is for a business that is split 50-50 between FCA and Renault shareholders with a balanced governance structure.
It said no plants would close as a result of the deal, despite the promise of large cost savings.
FCA said savings would be “achieved through more capital efficient investment in common global vehicle platforms, architectures, powertrains and technologies”.
The merger deal would be carried out under a Dutch parent company which would be listed on the Borsa Italiana in Milan, Euronext in Paris and the New York Stock Exchange.
The board would be composed of 11 members with four each for FCA and Renault and one nominee from Renault’s alliance partner Nissan which holds a 15 per cent stake in the French carmaker.
Additionally FCA shareholders would receive a dividend of €2.5bn to reflect the difference in equity market values of the two companies.
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The deal could have repercussions for Renault’s alliance with Nissan which is currently facing tensions following the arrest of former chairman Carlos Ghosn in Japan last year.
The French state, the largest shareholder in Renault with a 15 per cent stake, said it supports a deal with FCA in principle, but would need to see more detail, a spokesperson said.