Fiat Chrysler late Wednesday abruptly withdrew a proposal to merge with Renault, walking away from a deal that had the potential to change the balance of power in the global auto industry.
In a statement Wednesday evening, Fiat Chrysler said it continued to believe that the merger proposal was solid and “carefully balanced to deliver substantial benefits to all parties.” But it added, “It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”
In two days of meetings at Renault’s headquarters in Paris, its chairman, Jean-Dominique Senard, had sought to convince its board of the financial and industrial merits of a deal.
Since Fiat Chrysler officially unveiled its proposal on May 26, the plan has faced resistance by some Renault shareholders who argued that the Italian-American conglomerate was undervaluing a crown jewel of French industry. France’s powerful labor union at Renault objected to a deal, warning that a combined entity could lead to layoffs.
In a statement posted to its website on Wednesday, Renault said it was unable to make a decision because representatives of the French government, which has a seat on the board, requested to postpone the vote.
John Elkann, the Fiat Chrysler chairman, also held a whirlwind of meetings with French government officials in Paris over the weekend, promising that a deal wouldn’t lead to factory closures. The issue is politically sensitive for President Emmanuel Macron at a time when foreign companies including General Electric, Whirlpool and Ford are cutting thousands of jobs in France.
This is a developing story and will be updated.