What appeared to be a two-horse race to partner up with Fiat Chrysler Automobiles N.V. is now just down to one – Renault SA – with a deal potentially announced as early as Monday.
The deal, which was reported first by Bloomberg News, not only provides some each company with a strong ally to shore weak areas, it also opens the door to a potential deal with the Renault Nissan Alliance.
In late March, FCA was linked to talks with Renault as well as another French automaker, Peugeot, about a tie-up of some sort. While a deal was never consummated with either automaker at the, it appears discussions with Renault have been fruitful.
Neither FCA nor Renault has commented publicly.
(Fiat Chrysler attracting another French suitor: Renault. Click Here for the story.)
The deal could eventually lead to a full merger between the two companies, giving each something they need in different places. Renault has been buzzing about a return to the U.S., and a merger with FCA would give them an easier return to U.S. shores.
Details are tough to come by, but several reports suggest a swap of equity between the companies, much the same as the current deal with Nissan but with different ownership stakes.
Any deal between FCA and Renault would not change the U.S. operations or expansion plans for each company, a source said. FCA has its U.S. headquarters in Auburn Hills and the massive expansion of its manufacturing operations on Detroit’s east side would continue as planned.
(Click Here for details the possibility Fiat Chrysler without Fiat.)
Fiat is looking to expand in certain parts of Europe, such as Russia, and Renault’s reach there could certainly hasten that growth. Renault could also ease FCA’s entry into the electric vehicle market, where it is virtually non-existent right now. Many media outlets are reporting it could also mean a tie-up with Nissan.
Renault holds 43% of Nissan while the Japanese automaker holds just 15% of Renault. The two sides have been engaged in a delicate dance in recent months since the arrest of former Chairman Carlos Ghosn last November. After his re-arrest and subsequent release, Nissan and Renault officials have endured a tense relationship.
Nissan’s CEO Hiroto Saikawa has pushed for more independence for Nissan, but startlingly poor financial results and sales since then have put any goodwill-type conversations about a potential merger between the two companies – something Ghosn was said to be advocating before his detainment. However, a partnership that adds Fiat Chrysler also dilutes the influence of the French government — a sticking point with Nissan officials.
(For more about FCA’s search for a partner, Click Here.)
Nissan and Renault officials have agreed to put discussions on the back burner for now as the two sides deal with the ongoing saga that is Ghosn the charges of economic malfeasance. Japanese prosecutors are still culling together their final charges against the former leader of the Alliance