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Fiat Chrysler (FCA) withdrew its proposed merger with Renault on Wednesday, according to people familiar with the matter. Renault's board failed to make a decision on the acquisition due to opposition from Nissan. And point the finger at the French government's intervention.

Fiat Chrysler confirmed the news and said in a statement: "FCA remains convinced that there are compelling and transformative reasons for this proposal. However, France clearly does not have the political conditions for such a successful combination at the moment."

Fiat Chrysler suddenly decided to withdraw the proposal: less than three hours ago, the two companies were preparing to issue a joint statement, according to a senior executive with close knowledge of the negotiations between the two companies. said it would continue to push for a merger after receiving approval from Renault's board of directors. However, the plan is moving in different directions very quickly.

Renault's board had planned to meet later on Wednesday to consider the proposal. During the meeting, it was proposed by two Nissan representatives because the merger proposal would guarantee the alliance framework that Renault and Nissan have maintained for decades. However, Nissan is not too worried about the merger of Renault and Fiat. Nissan CEO Hirohito Nishikawa said the planned merger of Renault and FCA did not have any particularly negative impact on Nissan.

Renault's board issued a statement after Wednesday's meeting. Saying the board was unable to make its own decision, representatives of the French government requested that the vote be postponed to a later committee in the hope of winning the support of Nissan. As early as Tuesday, Renault's board failed to make a decision on Fiat Chrysler's proposed merger.

The French government is currently Renault's largest shareholder, holds a 15 per cent stake in Renault, has a representative of Renault's board of directors and has double voting rights. To pass the merger, the French government must agree.

The merger proposal was met with "a lot of demands and pressure" from the French government, and hours after the proposal was announced, the French finance minister made three key demands, including retaining all Renault jobs and factories in France, according to people familiar with the matter. The requirements of the French Government have been expanded to cover the location of the headquarters of the merged company and the composition of its board of directors. In addition, the French government also requires dividends to be paid to Renault shareholders, including the government.

At the Renault board meeting on Wednesday, the French Federation of Trade unions finally voted against the merger plan. Nissan was also expected to vote against it, but eventually abstained and other directors approved the proposal, but representatives of the French government asked to postpone the final decision by a week because they would fly to Tokyo to negotiate further with Nissan.

In the end, Fiat lost patience and decided to withdraw the merger proposal. And Fiat is clear and increasingly aware that this is not an environment in which merger proposals can be agreed.

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