Nissan, a long-time Renault partner, feared being sidelined by the deal and Saikawa warned Monday that a merger "would significantly alter the structure of our partner".
Fiat Chrysler (FCA) had stunned the markets last week by proposing a "merger of equals" with the French group that would create an auto giant spanning the globe, encompassing Renault's Japanese partners Nissan and Mitsubishi Motors.
The French carmaker made the announcement after a six-hour board meeting outside Paris - the day after a similar meeting was also inconclusive.
The official, who spoke on condition of anonymity in line with government policy, told The Associated Press the conditions outlined by France's finance minister still "need to be met". They later softened their tones, indicating there might be room for future negotiation.
"It was out of the question to put the alliance in danger for a merger", a French government spokesperson said Thursday.
Nissan Motor Co, which has an alliance with Renault, expressed reservations about the deal.
Already upset at being excluded while FiatChrysler and Renault held secret talks, Nissan could have actively worked to prevent the merger from happening.
Renault's powerful General Confederation of Labour union is against a Fiat Chrysler merger, fearing the loss of jobs and arguing the proposal undervalues Renault and bails out Fiat.
A first attempt to get the plan through ended Tuesday night when Renault's board, meeting at its Boulogne-Billancourt headquarters outside of Paris, adjourned without deciding on the Fiat proposal. "Given the longstanding relationship between Renault and Nissan, it's hard to imagine the merger working without Nissan's full support". Ghosn denies accusations of financial wrongdoing. It said it needed to study the draft in detail. The company said no plants would be closed as a result of a merger.
The headquarters of the French auto manufacturer Renault in Boulogne Billancourt, near Paris, on January 24, 2019.
Criticism of Fiat's May 27 proposal has gathered steam in recent days.
However, exacerbating the issue is the fact that Bigland reportedly sold his shares in the company past year, prompting FCA to act against him even more.
FCA has always been looking for a merger partner, and some analysts say its search for a deal is becoming more urgent as it is ill-prepared for tougher new regulations on emissions.
That was not enough for the government, which asked FCA for more time to go back to Japan to persuade Nissan to support the deal.
Italian Deputy Premier Luigi Di Maio is closely following the potential merger.
"There are many alliances in the automobile industry that don't work and just a few that work", the government spokesperson said.
He said he took for granted that the deal would protect workers. Fiat has best-selling brands like Jeep and the Ram pickup truck, while Renault has surged ahead in the production of emissions-free and self-driving vehicles.
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