A death in Zurich, an arrest in Tokyo and a young heir who wants to diversify his family’s holdings are helping to propel a Fiat-Renault tie-up
By Eric Sylvers, Nick Kostov and Christina Rogers Updated May 27, 2019 9:25 p.m. ET From left: former Renault chairman Carlos Ghosn, Fiat Chrysler Chairman John Elkann and former Fiat Chrysler CEO Sergio Marchionne. Photo: From left: Bloomberg News ; Getty Images A death in Zurich, an arrest in Tokyo and a young heir who has long wanted to ease his family’s dependence on the car business are the powerful human factors helping propel a proposed merger that could shake up the global auto industry.
The proposal is born of the same commercial pressures that have driven many other automotive tie-ups: the need for scale to survive intense global competition and fast-changing technology. A few months later, Mr. Ghosn was arrested in Japan for alleged financial misconduct, which he denies. His towering status at Renault also made potential merger partners guarded. He was replaced by Jean-Dominique Senard, a polished European executive whom Mr. Elkann found easier to deal with, according to a person familiar with the matter.
His family’s holding company, Exor NV, would be left with a stake of about 14.5% in the merged group, as opposed to the current de facto controlling stake of 29% in Fiat Chrysler. As less-dominant shareholders, it would likely be easier and not so politically explosive for the family to sell down their stake to raise funds for investments in other sectors, including technology, one of Mr. Elkann’s passions.
Still smarting Mr. Marchionne had already tried and failed, twice, to persuade GM of a merger’s merits. Mr. Marchionne even cajoled GM shareholders to put pressure on GM’s board. His tactics made headlines but added to his reputation as a bullying negotiator. Other car company executives, who had been reluctant to negotiate with Mr. Marchionne, also saw an opening to explore tie-up possibilities with Fiat Chrysler, the people said.
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Fiat Chrysler was also having parallel discussions with PSA, whose chief executive is Carlos Tavares. As late as this month, Mr. Manley had held separate workshops with executives from Renault and PSA to discuss the synergies that could flow from a tie-up, said one person close to the talks. The French government, which owns 15% in Renault, trusted the diplomatically tactful Mr. Senard to explore merger ideas while defending France’s national industrial interests.
Decades of Fiat A successful deal would be a financial triumph for Mr. Elkann, whose peripatetic childhood in the U.S., Brazil, France, Italy and the U.K. left him a polyglot who speaks Italian with a slight accent and imparted only a loose attachment to Italy, say people who know him.
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