fbpx
Edit Content

Fiat Chrysler Automobiles Prepares A €33 Billion Merger With Renault

Fiat

Fiat Chrysler Automobiles NV, the Italian-American multinational auto manufacturer, is prepared to announce an operational linkup with Renault SA, the French multinational auto maker, on Monday, in a deal that could point to a full merger of the two auto giants to create the world’s third-biggest automaker.

See Also: News about the Nigerian automobile industry.

The Merger Between The Automakers Is Worth €33 Billion.

Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

People conversant with the issue highlight that the deal could contain an initial trade of equity.

With this development, a French drive to forge closer ties with Nissan, which has resisted offers to join with Renault in a holding-company structure, has been put on hold. Bloomberg reported that Fiat conditioned the merger discussions on Renault concurring to not pursue a deal with Nissan in the short term. Talks between the companies have, however, hastened in recent days as representatives from both parties found a way to structure a deal. Renault’s board is scheduled to meet today.

Experts are of the opinion that a Fiat-Renault agreement would hold the possibility for massive cost savings in the struggling market through sharing investments.  However, should a deal proceed, Exor NV, the investment vehicle of Fiat’s founding Agnelli family (with a 29% stake in the business) would become the company’s largest investor. Also, Fiat’s Chairman John Elkann, who currently owns more stake than the Agnelli family, would turn out to be chairman of the combined company; Renault Chairman Jean-Dominique Senard would become chief executive officer.

Pressure On Global Automakers As Sales Decline.

Sources said that talks with Fiat have moved ahead without Nissan, Renault’s 20-year partner. This indicates the intense pressure shepherding automakers toward combining efforts and investments as sales slow down in the world’s biggest car markets and the push toward electrification deepens.

The two firms, together, made about 8.7 million cars in 2018. This would have jumped the pair of South Korea’s Hyundai Motor Group and Detroit’s General Motors. However, with sales dropping in the US, China and Europe, manufacturers are being pressed by controllers to electrify and reduce fleet emissions. They’ve also been compelled to spend seriously on self-driving technology or risk getting left behind by new, deep-pocketed competitors such as Waymo.

Can This Merger Lead To Higher Profits For The Firms Combined?

Sources reported that Fiat would give Renault, which is 15% owned by the French government, access to the North American market, while gaining weight in Russia (Europe), its second-biggest market, which accounts for almost half its sales with its Avtovaz unit. Almost one-third of Fiat’s global work force of 198,500 was situated in the region at the end of last year, even though the company makes almost all of its profit in North America.

In general, Renault distributions fell by 5.6% to 908,348 vehicles in the first quarter, while Fiat Chrysler sales dropped by 14% to 1.04 million cars and light trucks.

France To Strengthen Renault Alliance, As Other Carmakers Look To Each Other For Savings.

According to those familiar with the matter, the French Government has been kept up to date with meetings between Renault and Fiat Chrysler and will think about the impact of any planned tie-up in terms of jobs, valuation and industrial footprint. They hinted that French officials would, however, prefer a contract that strengthens the prevailing Renault alliance by bringing in Fiat, and at worst a deal with the Italian-American carmaker would have to be alliance-neutral.

Meanwhile, other carmakers are looking to each other for savings. BMW AG and Daimler AG have pushed aside enmities to join forces in sharing services and autonomous cars. Also, VW has been in talks with Ford Motor Company to team up on electric cars and autonomous vehicles.

Share:

Facebook
Twitter
LinkedIn

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Join Entrepreneurs Family

No spam, only business insights and tips. 

Entrepreneurs Sign Up

Business Registration

Most Popular

Join Entrepreneurs Family

No spam, only business insights and tips. 

Entrepreneurs Sign Up

Related Posts

How to close business deals

How To Close Deals And Increase Income For Entrepreneurs

How do you close deals? How do you close your first business deal and grow income year on year? This article explores how entrepreneurs can diversify, create new revenue streams, and close business deals using my own companies as examples. I’ll also share tips for closing deals. Selling More: Diversifying

Startup launch hacks

Startup Launch Hacks To Successfully Start Your Business

Launching a startup can be both exciting and daunting. Effective startup launch strategies are essential for navigating the competitive business space which is why we will be discussing startup launch hacks to help you launch your startup successfully. These strategies can be the difference between success and failure. See Also:

Important Business Skills

Top 5 Important Business Skills for Every Entrepreneur

Nigeria is experiencing a surge in entrepreneurial activities. More people are venturing into business, creating a vibrant and competitive environment. This growth is exciting but also challenging. Entrepreneurs face many obstacles, from financial constraints to market competition. To succeed, entrepreneurs need important business skills. See Also: How to transition from

Scroll to Top

Join Entrepreneurs Family!

Get access to FREE business insights and funding opportunities daily.

Entrepreneurs Sign Up