Italy open to taking stake in Fiat Chrysler-Renault merger

Rome

ITALY would be open to taking a stake in the proposed merger between Renault SA and Fiat Chrysler Automobiles NV, as long as the deal triggers economic benefits for the country, a government undersecretary said.

"Our government is open to investment, provided that this brings a positive impact in terms of economic growth and jobs for our citizens," the rightist League's Michele Geraci, who works at the economic development ministry, told Bloomberg Television when asked about Italy investing in the possible new entity.

The merger would see the French state's stake halved to 7.5 per cent, which "in principle is not against our view", Mr Geraci said.

France will back the proposed merger, as long as it offers the state a range of guarantees on jobs, a board seat and local headquarters, Finance Minister Bruno Le Maire said on RMC radio earlier on Wednesday, as the French carmaker's board prepares for a second day of deliberations on the deal.

Renault's board is meeting today to review Fiat's proposal after failing to come to a decision on Tuesday.

Its directors are examining in detail a preliminary merger agreement hammered out over the past days, according to a person familiar with the matter who asked not to be identified discussing private matters.

Obtaining a seat on the new entity's board for the French state, the carmaker's most powerful shareholder, is a "tough point" in the talks, Mr Le Maire said.

Mr Geraci welcomed the possible merger, saying he's in touch with the players involved "but the decision is with the shareholders of the company".

Fiat Chrysler's proposal last week for a 50-50 combination under a Dutch holding company is designed to help the companies add scale, share costs and boost resources for tackling an expensive shift to electrification and autonomous driving.

Longtime Renault partner Nissan Motor Co. has put up some resistance, while the French company's most powerful shareholder - the government - has outlined a list of demands on jobs and a board seat. The deal would create the world's third-largest car maker with the chance of becoming a global leader if Nissan later joins Fiat and Renault.

The combined entity "would really increase the production scale of the company by a large factor - we are looking at roughly 15 million production units a year" - and would help Italy catch up with Japan and other countries in electric cars, Mr Geraci said.

He will meet Japanese government members at the Group of 20 summit in Tokyo on Thursday.

"Japan is a very important partner for our country,'' Mr Geraci said. "It is important that the Fiat-Renault deal would look to Japan as a key partner.''

Also being considered: a possible payout to Renault investors, potentially by reducing a planned 2.5 billion-euro (S$3.84 billion) special dividend slated for Fiat owners, people familiar with the matter said. It's possible that a decision to move forward will be reached on Wednesday, according to the people.

The French government has insisted that any Renault combination with Fiat remain within the framework of the existing Franco-Japanese alliance. BLOOMBERG