The collapse of merger talks between Renault and Chrysler deaths and the fall of the shares of the two companies

Economy and stock exchange

Fiat Chrysler has announced its abandonment of the $ 35 billion merger offer to French company Renault, blamed on French politicians, prompting the two companies to fall sharply in early trading on Thursday.

Fiat attributed the reason to the French political scene in the failure of the historic deal that would have resulted in the creation of the third largest automaker in the world after Japanese Toyota and Volkswagen Germany.

A source close to the board of directors of the French car maker said Fiat Chrysler made its decision after France sought to defer a decision on the deal to win support from Nissan Motor, the current partner in the alliance with Renault.

French Finance Minister Bruno Le Mire said the government, which holds a 15 percent stake in Renault, had participated constructively in the talks but was not prepared to support an agreement that did not get support from Nissan.

Sources familiar with the talks said the French government had also pressed Chrysler's Fiat for assurances that France would not lose jobs and that dividends would be distributed to Renault shareholders, including the government. Chrysler's original proposal did not offer special distributions to Renault shareholders.

"It is clear that France does not currently have the appropriate political conditions for such a merger to proceed successfully," said Fiat Chrysler in a statement issued this morning from London.

Renault said in a separate statement that its board "was unable to make a decision because of the request of representatives of the French state to postpone the vote to a later meeting."

Nissan said it would abstain at the Renault board meeting to vote on the proposed merger.

The collapse of the deal again raises questions about how Fiat Chrysler and Renault will face the challenges of heavy investment in electric cars as well as autos.

By 0740 GMT, Renault shares fell 7.1 percent to 52.22 euros. Fiat Chrysler shares in Milan fell 1.9 percent to 11.48 euros. Shares in PSE rose 1.6 percent.

"There has been agreement on three of four conditions, the rest of which is to get clear support from Nissan," the finance minister said.

French Budget Minister Gerald Darmanan said he hoped the door would be "not closed" to the possibility of concluding the deal, adding that Paris would be happy to re-examine any new proposal from Chrysler's Fiat.