(Bloomberg) -- French and Italian leaders have reveled in throwing mud at each other, but two of the countries’ flagship companies are now looking beyond the bad blood to cozy up to each other.
The prospective deal, a proposal by Fiat Chrysler Automobiles NV (NYSE:FCAU) to merge with Renault SA (PA:RENA), could create the world’s third-biggest carmaker. The prospect is already triggering contrasting responses from politicians, though the Italian company has said there won’t be plant closures as a result of the combination.
On hearing news of the tie-up, the rightist League party of Deputy Premier Matteo Salvini, who has in the past clashed virulently with French President Emmanuel Macron, swiftly invoked Italy’s “national interest” and dangled the option of the Rome government stepping in. The League, after all, campaigned for Sunday’s European Parliament election on an “Italy First” platform.
“Given the state presence in Renault, the fact that two companies of this size plan to merge has to be looked at with special care,” the League’s Claudio Borghi, who heads the lower house budget committee, told La7 television. Borghi was quick to remind viewers that the French government fought tooth-and-nail against a bid by Italy’s Fincantieri for the France-based STX shipyard.
Italy will ensure “that the historic value of Fiat is guaranteed, otherwise we’ll intervene,” Borghi said, adding that could include the state taking a stake in Fiat to match the French holding in Renault.
Debt Mountain
A French government official said it would be surprising if the founding Agnelli family welcomed a state presence in the company. The official, who asked not to be named discussing confidential matters, also wondered aloud whether the Italian government -- already burdened with a mountain of debt -- would have the funds to pay for it.
Still, the official could not see any political risks to the merger, and insisted it would be a win-win for the two countries and their economies.
The merger will promote European “economic sovereignty,” French government spokeswoman Sibeth Ndiaye told BFM TV, adding the government favors the link-up, though it’s waiting to examine all the conditions.
With the League surging to become Italy’s biggest political force in Sunday’s European elections, Salvini could be more tempted than ever to fly the nationalist flag and take a provocative stand on the merger, especially if jobs are at risk.
“We welcome the FCA-Renault deal, as long as factories in Italy stay open,” the League’s Massimo Garavaglia, deputy finance minister, told Radio 24. “The market is always right.”
Recent cross-border transactions have inflamed nationalism in both countries. Telecom Italia (MI:TLIT) SpA’s two biggest shareholders, French media company Vivendi (PA:VIV) SA and U.S. activist investor Elliott Management Corp., have been locked in a battle for influence at the carrier for more than a year.
Salvini has taken particular pleasure in launching folksy broadsides against Macron, last year calling him “a polite young man who drinks too much champagne.” Salvini has also accused Macron of protecting fugitives wanted by Italian authorities, including convicted members of the far-left Red Brigades.
Macron, who has spoken of “populist leprosy,” retorted that Italians “deserve a government worthy of their history.”
The sparring between the two neighbors has quieted down from its low point, when France recalled its ambassador for a week in February, although Salvini repeatedly took aim at Macron in the European election campaign, calling the French leader a symbol of the liberal, establishment class he pledged to overthrow.