California residents may have heard about the potential merger between Fiat Chrysler and Renault. If the two companies were to come together, it would create the third-largest automaker in the world. However, talks were put on hold after the French government asked for more time to talk with Renault ally Nissan. This caused Fiat Chrysler to pull out of talks, and they blamed politics for making such a decision.
The French government had several conditions as it related to the merger. For instance, it wanted to make sure that the combined company would continue to take part in an electric battery program. It also wanted to make sure that the alliance between Renault and Nissan would remain intact. Nissan said that it was uncertain about how the deal would impact relations between it and Renault. However, there were agreements reached on the other conditions imposed by France.
Fiat Chrysler said that the deal would ultimately be beneficial for both sides. Renault would stand to save more than $5 billion in operating costs, and the new entity would have made more cars per year than General Motors. News of the deal received a positive reaction while news of the deal’s failure was met with disappointment. It is thought that the proposed merger may result in other companies considering their own alliances in the marketplace.
When two companies consider a merger, they will need to ensure that doing so will meet their business goals now and in the future. These goals could include saving money, gaining market share or obtaining access to intellectual property. Each company may want to hire an attorney with experience in mergers & aquisitions to review the terms of a deal and assist with any regulatory issues that may exist.