By Geoffrey Smith
Investing.com – Sergio Marchionne may be gone, but his spirit lives on.
The former Fiat boss would surely have applauded his successor plan for another transformative merger in order to solve the problems of slowing demand and frighteningly large investment commitments, as mobility becomes electric, autonomous and connected.
FCA's (NYSE 🙂 strongest card is the extra efficiency this scale creates: it estimates annual synergies of over 5 billion euros in addition to those [1
But as with so many Marchionne's great designs, Fiat Chrysler's movement on Renault risks being knocked down by the details – and by the large number of moving parts in the deal.  First, there is the promise of no plant connections. This comes after a six-month period, when – according to Bloomberg calculations – global car manufacturers have announced 38,000 job cuts. Of these, only 1500 came from FCA and none from Renault. The two companies are lagging behind to trim costs, and this promise reduces their ability to recover the maximum benefit from the deal (although it is obvious that there is no promise of the safety of white collars)
Secondly is the ownership issue: The Financial Times has quoted a named French government employee to say that the government is not against the deal, but the French state's efforts will be diluted in a merged company and it would only be the second largest shareholder behind Exor, the Agnelli Family holding company is now run by Johann Elkann. FCA has attempted to address control considerations by proposing an 11-member board of four members each for FCA and Renault, with another from Nissan.
No matter what the markets have decided they like the idea and have pushed Renault 13.7% higher Monday morning, while FCA is 9.9% higher. Peugeot (PA :), who could see its competitive position threatened, is down 2.6%. It helps Italy to lead Europe's stock markets higher in a morning when the mood has been lifted by the reasonably strong view of the centralist parties in elections to the European Parliament.
This is an increase of 0.9% while the French have increased by 0.3%. The reference, which includes many UK stocks that do not trade today due to the local bank holiday, is 0.4% at 377.32 pm. 4.30 ET (0830 GMT).
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