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France says local plants must stay open in Renault-Fiat merger plan

The French government, which owns a 15% stake in Renault, has so far backed the idea of a merger, which would reshape the industry by forging the world’s third-largest automaker.

FILE: A FCA (Fiat Chrysler Automobiles) logo is displayed on 6 March 2019 during a press day ahead of the Geneva International Motor Show in Geneva. Picture: AFP

PARIS - French Finance Minister Bruno Le Maire on Tuesday demanded that local plants remain open as part of a proposed merger between Italian-US auto giant Fiat Chrysler and France’s Renault.

The French government, which owns a 15% stake in Renault, has so far backed the idea of a merger, which would reshape the industry by forging the world’s third-largest automaker.

But Le Maire, speaking on RTL radio, asked Renault board chairperson Jean-Dominique Senard for a guarantee “on the preservation of jobs and industrial sites in France” and a commitment that no factory be closed in the country.

“This is the first guarantee that I requested from Mr Senard on the opening of these negotiations with Fiat,” Le Maire said.

“Since I have agreed to the opening of negotiations, it is up to him to come back to me in the coming days on the guarantees he was able to obtain from Fiat.”

When Fiat presented Renault with the 50-50 merger proposal on Monday, it said the deal would not result in any production sites closing.

Renault said it would study Fiat’s proposal “with interest” and after a board meeting over what it termed a “friendly” offer, the French carmaker said it would enter talks on a merger.

Le Maire confirmed that the French state would not increase its 15% stake in Renault, so would hold around 7.5% in the new group after the 50-50 merger.

The CGT union at Renault has been wary of the plan, urging the French government to maintain a blocking minority after any deal.

The proposal comes as Renault’s years-long partnership with Japanese automaker Nissan comes into question after the arrest and subsequent ouster of Carlos Ghosn, who had been Renault chief executive as well as Nissan chairperson.

Renault holds 43% in Nissan, which in turn owns 15% of its French partner. Despite pledges on both sides to pursue the alliance, analysts say the tensions might be pushing Renault to explore alternatives.

Le Maire said he was waiting for the deal “to be done as part of the alliance between Renault and Nissan”.

He also asked Senard for assurances that “French interests will be well represented” in the new group and called the merger “a great opportunity for Renault and the European automotive industry”.

The tie-up has been seen as potentially beneficial to both sides, giving Fiat Chrysler access to Renault’s electric car technologies while the French group could use Fiat’s extensive operations in North America to tap into the US market.

Italy’s government has been positive towards the plan, with outspoken deputy prime minister Matteo Salvini calling it a “brilliant deal”.

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