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Volvo stalks Rena

19th October 1989
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Page 8, 19th October 1989 — Volvo stalks Rena
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Which of the following most accurately describes the problem?

or merger

• Volvo and Renault started discussions last week on "potential areas of cooperation", leading to speculation that the two companies may merge.

"My personal opinion is that this will not be a simple case of one company buying the other, or a merger, although, that might be the ultimate aim,'" a source at Renault said this week. "A collaboration like the Club of Four is entirely possible. In this case, though, it would be the Club of Two."

Another French source says: "It would be impossible for Volvo to buy Renault. The unions, the people would be in the streets. The French C ernment would not allow t Renault name to simply disappear."

But a merger would not necessarily mean that Rer would simply disappear. According to an executive competing truck manufacti the most likely outcome o talks is an initial joint vent leading to a merger of the automotive giants, which I combined turnover last ye roughly $24 billion. If they merge, he says, Renault i probably take over manag ment of car sales and pro( lion, with Volvo managen, running truck operations. a merger does come abthe combined company Id be the world's largest ufacturer of trucks and the th largest of cars.

enault will not confirm that ; with Volvo are taking e, but Volvo says: "Discuss are underway to see if :an achieve some co 7ative agreement." he EC has been informed ie talks — like the French Swedish governments, it Id have to approve a merof this scale. An EC

.ce says: "They could waited, but the approval :ess can take time. Informhe EC so early might indithat they are working to a !table."

C Commissioners are about ecide if the French govern,t can write off £1.2 billion enault's debts.

pproval may depend on the :ome of talks in Paris this k between the EC's corndon Commissioner Leon Lain and French Premier del Rocard.

russels is under pressure ike a quick decision as the

position of the debt would have to be cleared up before any Renault/Volvo merger.

Before agreeing to a writeoff the Brussels Commission wants assurances that restructuring plans at Renault involving major cuts in capacity and workforce will go ahead. A decision is expected within two weeks.

El The Renault talks are not the only negotiations now underway at Volvo. According to a Volvo spokesman, the Swedish truck builder has made an offer to Empresa Nacional de Autocamions SA (ENASA) which owns Pegaso Trucks. "Negotiations are more or less finalised," he says, "we are waiting for an answer."

According to other sources, the suitors of the Spanishgovernment-owned truck builder have been reduced to two: Fiat (on behalf of Iveco), and MAN (backed by MercedesBenz). "If the deal turns out to be good for Spain you can expect an announcement before the elections on 29 October," CM has been told.

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Locations: Paris

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