Fiat Chrysler Automobiles late on Wednesday withdrew its offer to merge with French automaker Renault.
The two automakers made public their talks to merge in May after months of negotiations. Renault's board of directors met in Paris this week to discuss the 50/50 merger, although talks stalled after representatives for the French government, which owns a 15-percent stake in Renault, requested a delay on the decision to merge.
FCA later issued a terse statement over the dissolution of the merger and said that it will "withdraw with immediate effect its merger proposal."
"FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties," FCA said in its statement. "However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully."
People familiar with the talks told The New York Times that the French government requested the delay in order to discuss the deal with Nissan, which is an alliance partner and major shareholder of Renault. One of the people said FCA saw the request for a delay as a sign the deal would go nowhere, while another said the French government's demands, including commitments on numbers of jobs, was too much for FCA.
Nissan is open to the deal going ahead but remains cautious as a merger with FCA would provide Renault with more weight in pushing ahead with a subsequent merger with Nissan, which was a goal of Carlos Ghosn, the ousted chairman of Renault and Nissan who is facing charges of financial misconduct in Japan. Renault owns 43.4 percent of Nissan, while Nissan owns just 15 percent of Renault.
This article has been updated to include comments from 'The New York Times' sources.