Fiat Chrysler-Renault 50-50 merger plan could reshape automotive industry

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Fiat Chrysler-Renault

Fiat Chrysler Automobiles (FCA) has proposed merger its business with Renault. If this merger plan goes through, it would create world’s third largest automaker with 8.7 million annual vehicle sales. In an environment of growing regulatory pressure, dwindling sales and rising cost, Fiat Chrysler is looking to consolidate by forming a partnership with Renault. Earlier discussion between the two identified geographies and products. The main point of discussion in Fiat Chrysler-Renault merger is development of new technologies. Renault confirmed the report by releasing a statement saying that board is reviewing the proposal and further study “with interest the opportunity of such a business combination.”

If Fiat Chrysler-Renault is given green light, it will bring several brands under one roof such as Jeep, Chrysler, RAM, Alfa Romeo, Fiat, Renault, Lada, Daca and Nissan. Under the merger proposal, combined business would be split between Renault and Fiat Chrysler shareholders. Board member would constitute of 11 members and majority of them would be independent. Four members from Renault and Fiat Chrysler along with one member from Nissan would get equal representation. The parent company after Fiat Chrysler-Renault merger would be listed on Borsa Italiana in Milan, Euronext in Paris and the New York Stock Exchange.

Combined market value of Fiat Chrysler-Renault stands at $36.5 billion. FCA’s US operation won’t be affected by this merger as the company has no plan to close its plants there post the completion of the deal. Fiat Chrysler Automobiles is known for Jeep and Ram trucks, but has larger business thanks to ownership of Alfa Romeo, Lancia, Maserati, and Fiat. French automaker Renault formed a partnership with Nissan under the leadership of Carlos Ghosn, but in recent times the relation has soured for different reasons. Nissan owns 15% of Renault and Renault owns 43.4% of Nissan.

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