Renault Chairman Jean Dominique Senard revealed the details of the merger offer from Fiat Chrysler to Nissan officials during a board meeting in Tokyo.
The move to merge Fiat Chrysler and Renault, creating the world’s third-largest automaker just got a little more complicated today: Renault revealed the offer to its current partner, Nissan Motors.
Nissan got its first briefing on the potential blockbuster deal when Renault chairman Jean-Dominique Senard was in Tokyo for a board meeting of the three-way alliance among Renault, Nissan and smaller Japanese automaker Mitsubishi Motors Corp.
“There was an open and transparent discussion on FCA’s recent proposal to Groupe Renault. The meeting also discussed and positively concluded several current operational alliance matters,” the Renault-Nissan-Mitsubishi alliance said in a statement.
No action is expected to be taken by Nissan in the near term, and no additional information was offered with the statement.
(Putting the jigsaw together: Who will run what at a merged FCA-Renault? Click Here for the story.)
After months of hinting around, Fiat Chrysler took the plunge with Renault on Monday with very few details revealed. However, one potential stumbling block to the merger is the agreement Renault has in place with Nissan and Mitsubishi.
Fortunately, Nissan isn’t really required to do anything right now. The due diligence process between FCA and Renault could last more than a year. The next move has Renault’s board meeting early next week to decide whether to agree to the proposal. Assuming a “yes” vote, working out issues with unions, governments, antitrust authorities and other regulatory bodies are expected to take a year.
This works fine for Nissan in a sense because after years of upward growth, the company’s sales and profits stalled, which means its board of directors already has enough work to do to formulate a plan to turn the current predicament around.
(Click Here to see more about Nissan shooting down a merger proposal with Renault.)
Nissan officials predicted that 2018 would be a difficult year for the company, and the final numbers show they were right to be worried — operating profit for the automaker dropped 57.3%.
The Japanese automaker was plagued with a variety of problems all at once, including a costly plan to improve “quality of sales” in the U.S. and the costs related to the implementation of a warranty extension effort for selected vehicles.
Some of the issues the company faced it could have sold its way past, global unit sales fell by 4.4% to 5.516 million units. Sales in the U.S. fell 9.3% to 1.44 million units. The company is predicting a slight increase for 2019 to 5.54 million units worldwide.
(To see more about Nissan’s difficult 2018 financially speaking, Click Here.)
Nissan generated an operating profit of 318.2 billion yen, or $2.9 billion, for the full year on net revenues of 11.57 trillion yen, or $104.2 billion, equivalent to an operating margin of 2.7%. Full-year net income decreased by 57.3% to 319.1 billion, or $2.9 billion, yen, from 746.9 billion yen.