Fiat Chrysler withdraws its offer for Renault

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.

The stunning move came after two days of meetings at Renault’s headquarters in Paris where its chairman, JeanDominique Senard, had sought to convince its board of the financial and industrial merits of a deal.

In a statement Wednesday evening, Fiat Chrysler said, “It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Since Fiat Chrysler officially unveiled its proposal May 26, the plan has faced resistance by some Renault shareholders who argued that the ItalianU.S. 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.

The negotiations were also complicated by Renault’s long-term alliance with Nissan. In a statement Monday, Nissan’s chief executive, Hiroto Saikawa, said a full merger with Fiat “would significantly alter the structure of our partner Renault,” and added, “This will require a fundamental review of the existing relationship between Nissan and Renault.”

The withdrawal came after the French government said Wednesday that it would not approve a deal unless Nissan, with which Renault has had a formal alliance for 20 years, backed the offer.

In a statement posted to its website 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.