It ain't over until it's over.
Things were looking good for a potential $35 billion merger between Fiat Chrysler Automobiles and Renault when suddenly the plug got pulled. Who did this? None other than FCA Chairman John Elkann himself only a week ago. The reason? French government interference. FCA and Renault both blamed the government following a blocked vote by its board. It also demanded additional time to win Nissan's approval. Remember, Renault holds a significant stake in Nissan and the French government is Renault's biggest shareholder.
Despite this government interference, however, Reuters claims Elkann and Renault chairman Jean-Dominique Senard are secretly holding talks to revive the merger plan. Both FCA and Renault have so far declined to comment. Apparently, a senior advisor to Elkann is in Japan right now at Nissan headquarters to discuss next step options with senior management.
Nissan has also declined to comment. What could be happening is a compromise of sorts following a report that Senard had warned Nissan CEO Hiroto Saikawa that Renault's board could potentially block certain governance reforms Nissan is demanding regarding board committees. Basically, the pressure is being increased in order to force all sides to compromise. Saikawa is keen to produce a "rebalancing" act regarding Nissan's relationship with Renault.
He believes Nissan isn't being treated as an equal enough partner given its superior size. For example, Nissan's 15 percent stake in Renault carries no voting rights. Saikawa also wants a reduction in Renault's stake.
Question is, will the French government agree to that in the end? How far will FCA's Elkann be willing to go to compromise? For now, these secret but intense negotiations continue to take place but the window of opportunity for a deal, a revived merger plan, is short. "If there's going to be a deal it will probably be in weeks rather than months," one alliance executive said.