© Reuters. FILE PHOTO: The logos of Renault and Fiat carmakers are seen in Nice

By Laurence Frost

PARIS (Reuters) – Fiat Chrysler said on Wednesday it was withdrawing its $35 billion merger offer for Renault (PA:), calling off what would have been a landmark deal to create the world’s third-biggest automaker.

A source close to the French carmaker’s board said FCA took the decision after France sought to delay a decision on the deal.

Renault directors failed to reach a verdict on FCA’s May 27 merger proposal at a board meeting that ran late into Wednesday night, the company said.

The board was “unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting”, Renault said in a statement.

The deal, cast as a merger of equals that would tackle the costs of far-reaching technological and regulatory changes, would have altered the landscape for rivals including General Motors (NYSE:) and Peugeot-maker PSA Group, which recently held inconclusive talks with Fiat Chrysler.

FCA, Renault and its 15% shareholder, the French state, had been locked in talks over the Italian-American manufacturer’s bid. France had broadly welcomed the tie-up, on condition it guaranteed Renault’s domestic blue-collar jobs and plants.

Analysts had warned of complications, including Renault’s existing alliance with Nissan, the French state’s role as Renault’s largest shareholder and potential opposition from politicians and workers to any cutbacks.

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