UPDATE: FCA Withdraws Renault Merger Offer

Fiat Chrysler Automobiles NV confirms has withdrawn its offer to merge with Renault SA, citing an unfavorable political climate in France.

FCA says its original proposal had been “carefully balanced to deliver substantial benefits to all parties.” But it indicates that demands by the French government, which owns 15% of Renault, show that “political conditions in France do not currently exist for such a combination to proceed successfully.”

Renault’s board met on Wednesday night to decide whether to proceed with the merger talks. But the panel came to no decision because board members from the French government asked that the vote be postponed, according to a statement from Renault.

Media reports say the French state earlier this week sought greater job guarantees for Renault employees, better terms for the company’s shareholders and a continued strong voice in the business decisions of the merged companies.

Sources tell The Wall Street Journal that FCA also was concerned that Nissan Motor Co., which also owns 15% of Renault and occupies two seats on its board, intended to abstain from the board vote.

Nissan has been wary of how an FCA-Renault merger would impact the alliance Renault and Nissan launched 20 years ago. FCA had been eager to protect the partnership, touting the cost savings and technology-sharing benefits to all three carmakers.

Nissan CEO Hiroto Saikawa acknowledges the potential gains. But he also says Nissan would conduct a “fundamental review” of a post-merger alliance to decide whether to support the partnership.