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Fiat Chrysler withdraws Renault merger proposal

FCA cites the French government's involvement as the main reason why it pulled out.

Fiat Chrysler Renault
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Fiat Chrysler Automobiles has withdrawn its proposal for a merger with France's Groupe Renault, The Wall Street Journal reported Wednesday. In May, Fiat Chrysler was seeking "a potential 50/50 merger transaction" between the two companies.

"The Board of Fiat Chrysler Automobiles NV, meeting this evening under the chairmanship of John Elkann, has resolved to withdraw with immediate effect its merger proposal made to Groupe Renault," FCA said in a statement. "FCA expresses its sincere thanks to Groupe Renault, in particular to its chairman and its chief executive officer, and also to the alliance partners at Nissan Motor Company and Mitsubishi Motors Corporation, for their constructive engagement on all aspects of FCA's proposal."

The Wall Street Journal reports Nissan -- Renault's alliance partner -- refused to support the merger deal. According to people familiar with the matter, Nissan representatives were doubtful about the Japanese automaker's commitment to the alliance should the merger take place.

The French government, which maintains a 15% stake in Renault, said it would not approve a merger unless Nissan would still commit to the alliance. Fiat Chrysler ultimately withdrew the merger proposal following the French government's request to further delay a vote on the merger -- the second one this week.

"It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully," FCA said in its statement.

"Groupe Renault expresses its disappointment not to have the opportunity to continue to pursue the proposal of FCA," the French automaker said in a statement Thursday. "We view the opportunity as timely, having compelling industrial logic and great financial merit, and which would result in a European-based global auto powerhouse."

Originally published June 5.
Update, June 5: Adds statement from Fiat Chrysler Automobiles; June 6: Adds statement from Groupe Renault.