FCA and Renault have revised their merger proposal, in a bid to win the favour of the French government.
Fiat Chrysler Automobiles (FCA) has entered fresh discussions with Renault, revising their merger proposal in a bid to secure backing from the French government, according to a report by Automotive News Europe.
The revised deal will provide Renault shareholders with a special dividend, offer stronger job guarantees for the French firm’s existing staff and secure a seat for the French government on the board.
A Renault special dividend will improve the deal’s value for the brand’s shareholders, balancing the proposed €2.5 billion dividend for FCA investors. Guarantees to maintain Renault’s blue-collar jobs will also be extended from two to four years, in an attempt to satisfy the needs of the unionised French workforce.
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The €37 billion merger (£33 billion) will see FCA and Renault each own an equal share of the new car manufacturer, bringing efficiency savings in excess of €5 billion in addition to those Renault already enjoys with its existing Alliance partners, Nissan and Mitsubishi.
If the deal is finalised, the new automotive giant will have a combined global annual sales figure of 8.7 million vehicles, making it the world’s third-largest car manufacturer, behind Toyota and Volkswagen.
Due to its 15 percent share in Renault, the French government will also hold a 7.5 percent share in the merged company, meaning it will likely be granted a seat on the new firm’s board. Nissan will not be directly involved in the FCA–Renault merger, although it’s share in Renault will be reduced from 15 percent to 7.5 percent as part of the agreement.
The plan originally proposed by FCA did not require any plant closures, with the savings coming from increasing and pooling global development budgets for new car platforms, engines and other technologies. The plan also claims that the deal would lead to the creation of a “broad and complementary brand portfolio” that would “provide full market coverage, from luxury to mainstream.”
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