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EADS

Defence fusion flop ‘won’t harm German ties’

The collapse of the $45-billion defence merger between EADS and BAE Systems, widely blamed on German resistance, will not harm ties between Paris and Berlin, Germany's economy minister said Thursday.

Defence fusion flop 'won't harm German ties'
Photo: Dirk Vorderstraße

"The failure of the merger between EADS and BAE systems does not weigh on the Franco-German friendship," Philipp Rösler told Friday's edition of business daily Handelsblatt.

"We will work as well and with the same amount of trust as before with our French partners," Rösler added.

After the deal crumbled, the chief executive of EADS, Tom Enders, said he was surprised by the level of resistance in Germany to the tie-up, which would have created the world's biggest aerospace group.

"Im ready to admit that we never expected to face such opposition against the deal, in particular not in Berlin," Enders said in a letter to employees obtained by AFP.

Analysts said Germany feared being sidelined after any such tie-up and was worried that jobs and factories could go with only one year until an election in Europe's top economy.

But in a separate interview, Rösler rejected accusations that Germany should be blamed for the botched tie-up attempt.

"The Federal government carried out discussions on an eventual merger in a constructive manner," the minister told Frankfurter Allgemeine Zeitung in an interview also to be published Friday. 

"In the end, the governments concerned could not agree on the basis of what the companies were proposing," he said. Rösler added that the markets, that had sent the EADS share price plunging as soon as the merger attempt was revealed, clearly demonstrated that they "trusted EADS in its current form.

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BUSINESS

Renault shares plunge as Fiat merger talks fail

Renault shares plunged on Thursday after Italian-American carmaker Fiat Chrysler said it had withdrawn a proposal for a merger, saying it would be unable to reach an agreement with the French government.

Renault shares plunge as Fiat merger talks fail
A merger between Fiat Chrysler and Renault would have created the world's biggest carmaker. Photo: Marco Bertorello/AFP

Fiat Chrysler (FCA) “remains firmly convinced” of the interest of its offer but “political conditions do not currently exist in France to carry out such an arrangement”, it said in a statement.

French automaker Renault announced earlier that its board of directors had not reached a decision following a crunch meeting held at the request of the French state, the biggest shareholder in Renault with a 15 percent stake.

Fiat Chrysler proposed a “merger of equals” with Renault last week which was welcomed by financial markets and had been given a conditional green light by the French government, although it warned against “any haste” regarding the proposed 50/50 merger.

READ ALSO: Fiat Chrysler proposes merger with Renault


Photo: Loic Venance, Marco Bertorllo/AFP

French Finance Minister Bruno Le Maire had said a merger, which would have brought together the flagship brands as well as Alfa Romeo, Jeep, Maserati, Dacia and Lada, would be “a real opportunity for the French auto industry”. However, he had set various conditions, including that no plants be closed as part of the tie-up and that the Renault-Nissan alliance continues. 

A source close to Renault said Le Maire had asked for a board meeting next Tuesday after he returns from a trip to Japan where he will discuss the proposal with his Japanese counterpart.

At Wednesday evening's board of directors vote at Renault's headquarters near Paris, all the directors were for the merger, apart from a representative of employees affiliated with the powerful CGT union and two representatives of Nissan — a long-time Renault partner — who abstained, the source added.

The two directors appointed by Nissan, however, asked “to write in the minutes that they would say yes with a little more time”.

Fiat Chrysler said: “FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties.

“However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Renault holds a 43-percent stake in Nissan, whose stocks tumbled 2.64 percent to 742.7 yen on Thursday after the withdrawal was announced. Relations in the partnership have been under strain since the arrest last November of former boss Carlos Ghosn, who is awaiting trial in Japan over charges of under-reporting his salary for years while at Nissan and using company funds for personal expenses.

The merger would have created a group worth more than €30 billion, producing 8.7 million vehicles per year. The combined mega-group — including Nissan and Mitsubishi — would be by far the world's biggest, selling some 15 million vehicles, surpassing Volkswagen and Toyota, which sell around 10.6 million each.

Foreign takeovers of major French firms are highly controversial and successive governments have sought to defend domestic industrial groups which are seen as important for their technology or jobs. 

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