Fiat Chrysler Automobiles has, “with immediate effect,” withdrawn the merger proposal it had forwarded for French automaker Renault.
The withdrawal notice was announced on Wednesday by the carmaker’s board.
In their statement, the FCA board noted that the move was informed by the “political conditions in France,” which at the moment, do not exist for the proposed merger to proceed successfully.
The statement continued that Fiat Chrysler was “firmly convinced” that the rationale behind their initial proposal was compelling and transformational, which was visible from the way the idea was “widely appreciated since it was submitted.”
Sources had earlier told news publications, Bloomberg and Dow Jones, that tie-up proposal collapsed after Renault’s board allegedly failed to reach a decision regarding the FCA bid.
According to the Dow Jones, Renault’s board met on Wednesday to deliberate on the proposal, with the two representatives from Nissan reportedly not in favor. The other board members were said to have been prepared to sanction the merger move.
The French carmaker then released a statement from its board of directors, who said late Wednesday that they had been “unable to take a decision.” The board noted that the failure was occasioned by a request from the government representatives who wanted the vote postponed “to a later Council.”
Fiat Chrysler and Renault had been in merger talks that aimed at combining resources to curb the costs of vehicle production. The tie-up was expected to create the third-largest automaker in the world. Estimates put their combined annual sales at 8.7 million vehicles.
The French government, however, is said to have said it would only back the merger on condition that Japanese carmaker Nissan offered guarantees regarding its long-held alliance with Renault.
So, when the French government requested that Renault’s vote be delayed, Fiat Chrysler moved and decided to withdraw their merger proposal.
Commenting on the matter, French Finance Minister Bruno Le Maire pointed out that there was no need to rush the merger talks. He said the carmakers and other concerned parties need to take the time to ensure everything is done in the right manner.