FCA Ponders Richer Offer for Renault Merger Bid

Fiat Chrysler Automobiles NV reportedly is considering sweeteners to build more support from the French government for its proposed $35 billion merger with Renault SA.

The enhancements would include a special dividend for Renault shareholders to balance the €2.5 billion payout FCA shareholders would receive under the initial proposal made on May 27, sources tell Reuters.

FCA’s proposal envisions the two carmakers being acquired by a Dutch holding company that would be owned 50:50 by FCA and Renault shareholders. The French state, which holds a 15% stake in Renault and two seats on the company’s board, would own 7.5% of the merged entity and be given one seat on its board.

Similarly, Nissan Motor Co.’s existing 15% stake in Renault would give it a 7.5% stake in the merged company and one board directorship.

FCA initially suggested establishing the operational headquarters of the merged entity in a “neutral” city, such as London. But Reuters says the company has signaled willingness to place the headquarters in or near Paris. FCA also would pledge to extend job guarantees for Renault operations in France to four years from the two years described in the initial proposal.

Last Friday Reuters reported that Renault’s board would decide tomorrow whether to open formal merger talks. The news service says discussions between FCA, Renault and the French government about the merger are already “intensive.”