Fiat Chrysler ends merger talks with Renault over Nissan role

MILAN — Fiat Chrysler’s surprise decision to withdraw a merger offer with French carmaker Renault, blamed on the “political conditions in France,” has stunned the industry.

The offer collapsed Thursday on fundamental differences over when Renault’s longtime alliance partner, Nissan, would be brought in.

The merger plan, which had sought to create the world’s third-largest automaker, had been viewed positively across the industry since it was announced last week. And it appeared to be a done deal when the Renault board met for a second day in Paris on Wednesday evening.

But Fiat Chrysler chairman John Elkann decided to withdraw the offer as the Renault board meeting entered the early morning hours after the French government — Renault’s top shareholder with a 15% stake — asked for more time to seek Nissan’s blessing.

A person in Italy who has been close to the talks said both the French government and Nissan had agreed during the course of monthslong negotiations that the Fiat Chrysler-Renault merger would happen first, and then the future of the alliance would be considered at a later stage.

The person said France essentially backtracked this week when it said it wanted the backing of Nissan before agreeing to start working on the details of a potential merger.

“A merger cannot be subject to external conditions,” said the person, speaking on the condition of anonymity and adding that withdrawing the offer was not a negotiating tactic.

“It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” Fiat said in a statement that pulled the plug on the offer. The company said it had no hard feelings with either Renault or its alliance partner Nissan, thanking them both for their “constructive engagement.”