Fiat Chrysler Automobiles (FCA) has withdrawn its proposal to merge with Renault after the French carmaker’s board failed to reach a decision.
It said it had been unable to reach agreement earlier this week, because French government representatives had requested a postponement.
The French government is the biggest shareholder in Renault, with a stake of more than 15%. Nissan also owns 15% of Renault, while Renault owns 43.4% of Nissan's shares.
FCA had proposed the merger with Renault, which would save €5 billion (£4.4bn) a year by sharing development costs on technology such as electric vehicles and self-driving cars, just over a week ago.
The combined business would have been 50% owned by Fiat shareholders and 50% by Renault. Combined vehicle sales would have been 8.7 million units.
FCA said it had become clear that “the political conditions in France do not currently exist for such a combination to proceed successfully”.
However, it said that it remained “firmly convinced of the compelling, transformational rationale” of the proposed merger.
Renault's share price fell by nearly 7% in response to FCA’s decision.
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