Automotive News Europe — 2024-02-05
Automotive Industry
Stellantis Chairman John Elkann said the automaker had no M&A plans in response to press speculation about a possible French-led merger with rival Renault.
"There is no plan under consideration regarding merger operations with other manufacturers," Elkann said in a statement on Monday 5 February.
Stellantis is committed to a plan "which brings together the Italian government with all the stakeholders in the automotive industry to achieve important common goals to address the challenges of the electric transition," Elkann said.
On Sunday 4 February, Italian daily Il Messaggero said the French government, which is Renault's largest shareholder and has a stake in Stellantis, was studying a merger plan between the two groups.
France is considering a merger between the two automakers to strengthen its grip on the sector and counter Chinese and German competition, Il Messaggero said.
Shares in Renault initially rose more than 4% on Monday, with traders citing media speculation over the potential combination. They pared gains to 1% after Elkann's comments.
After abandoning Russia, at the time its second-largest market after France, following Western sanctions following its invasion of Ukraine, and reducing the scope of its global cooperation with Nissan, Renault has been seen as a potential M&A target.
Speculation intensified after an electric vehicle market slowdown forced the automaker to cancel IPO plans for its EV and software unit Ampere.
Renault is led by Luca de Meo, an Italian whose previous roles included working at Fiat.
Renault's market cap remains stubbornly low at little over €10 bn ($10.8 bn) despite a financial recovery over the past few years.
Stellantis is one of the most profitable groups in the industry and has a market cap of more than €85 bn when unlisted shares are factored in.
Stellantis is the product of a merger in 2021 between France's PSA group and Fiat Chrysler Automobiles, with brands including Fiat, Peugeot and Jeep. Stellantis's 14 brands include Citroen, Jeep, Opel and Alfa Romeo.
Excess capacity
Analysts question the rationale of a Stellantis-Renault merger, which would also expand excess capacity in Europe.
Jefferies last week said that Europe would not be the priority for any potential Stellantis M&A activity, with Renault not offering significant scale in other areas of the world, while a deal would also face antitrust obstacles.
The merger discussion in Italian media was fueled by Stellantis CEO Carlos Tavares's remarks last week.
He said that the ascendancy of Chinese manufacturers, the European Union's efforts to phase out combustion engines, and the United Auto Workers union's costly new contracts were among the factors fueling greater potential for M&A.
Tavares, 65, also said antitrust authorities will have to take these circumstances into account when deciding whether to approve another major deal like merger of PSA and Fiat Chrysler.
Tavares has said Stellantis is gearing up for an era of auto-industry consolidation, predicting the rush to offer more affordable electric vehicles will end in a "bloodbath."
He has paid particularly close attention to Renault, a company he perceives as vulnerable, but also didn’t rule out possible future interest in other carmakers.
Tavares also said Italy should do more to protect auto jobs instead of attacking Stellantis, which owns several factories in Italy building Alfa Romeo and Maserati cars as well as Fiats. The Italian government has accused Stellantis of acting against the national interest on occasions.
Industry Minister Adolfo Urso last week raised the prospect of the Italian government taking a stake in Stellantis to help to balance the French influence.
A Renault spokesperson said on Monday the company did not comment on rumors. France's Finance Ministry declined to comment.