Investors in California and around the country who follow the auto sector will likely be aware that Groupe Renault and Fiat Chrysler Automobiles have announced merger plans. If the deal is approved by company executives and withstands regulatory scrutiny, it would create the world’s third-largest carmaker. According to Fiat Chrysler, ownership of the newly formed company would be divided equally between Groupe Renault and FCA shareholders.
Industry sources have reported that Renault executives are expected to announce within days whether or not they intend to support the proposed merger. If approved, the deal could generate annual savings of as much as $5.6 billion. This money may be used to develop the electric and autonomous vehicles that are soon expected to dominate the market. The two companies had a combined sales of 8.66 million vehicles in 2018. Renault has a strong market position in Europe while Fiat Chrysler’s Dodge Ram and Jeep brands are extremely popular in the United States.
News suggesting that Renault may be open to a merger with Fiat Chrysler has not come as a complete surprise to auto sector observers. The French company entered into a strategic alliance with Mitsubishi and Nissan in 1999, but the future of that partnership became the subject of much speculation in late 2018 when the Nissan-Renault chief executive officer was arrested for crimes he allegedly committed while heading Nissan.
Merger deals involving companies from different countries that appear equally strong often make a great deal of sense on paper, but they can be extremely difficult to close. Attorneys with experience in mergers and acquisitions could seek to avoid roadblocks by helping executives to see the benefits of a long-term strategic alliance. They could also take steps to ensure that international deals comply with the laws and regulations of all of the countries involved.