(Bloomberg) -- Renault SA took steps to ease strains with its partner Nissan Motor Co. as the board considers an offer to merge with Italy’s Fiat Chrysler Automobiles NV.

Directors of the French carmaker, including two representatives of Nissan, will be able to conditionally approve entering detailed talks with Fiat, said a person familiar with the matter. Fiat Chief Executive Officer Mike Manley is in Paris Tuesday ahead of the vote, which would stop short of approving a merger.

Renault’s path toward a deal with Fiat was muddied on Monday by Nissan, which holds 15% of the French manufacturer. Nissan CEO Hiroto Saikawa said the company needs to review the future of their partnership, including contractual relationships, in light of Renault’s potential tie-up with Fiat.

Fiat Chrysler’s proposal for a 50-50 Dutch holding company would create the world’s third-biggest automaking group, adding scale to help the companies share costs and resources while tackling an expensive shift to electrification and autonomous driving. Shares of both Fiat and Renault climbed early Tuesday.

While Nissan can’t block a Fiat-Renault combination, the Yokohama-based company could use its strong presence in China, Japan and the rest of Asia, as well as its electric-car technology, as leverage. French Finance Minister Bruno Le Maire has also said he wants any combination with Fiat to come within the framework of the Franco-Japanese alliance, which also includes Mitsubishi Motors Corp.

‘Fundamental Review’

“The potential addition of FCA as a new member of the alliance could expand the playing field for collaboration and create new opportunities for further synergies,” Saikawa said in his statement. “That said, the proposal currently being discussed is a full merger which — if realized — would significantly alter the structure of our partner Renault. This would require a fundamental review of the existing relationship between Nissan and Renault.”

The French government, Renault’s most powerful shareholder, is also making demands. It wants additional guarantees from Fiat to avoid job cuts in France and other steps to protect national interests, people familiar with the matter have said.

France is seeking operational headquarters of the combined company in Paris, and a special dividend for shareholders of Renault, which owns a 43% stake in Nissan, as well as a French government seat on the new company’s board, a finance ministry spokesman said.

He said Le Maire is also seeking guarantees on the mandate of Senard. The minister’s office wants Senard, 66, to have the CEO role for at least four years, one of the people said.

Representatives for Renault and Fiat Chrysler have declined to comment.

Renault shareholders including the French government, which owns a 15% stake, would get an implied premium of about 10%, while Fiat owners would get dividends to account for its higher equity value. Renault shares rose as much as 3.9% by 11:41 a.m. in Paris, while Fiat climbed 3% in Milan, giving the firms a combined market capitalization of about 34.2 billion euros ($38.5 billion).

The relationship between Renault and Nissan has been strained by the fallout from the arrest of their former chairman, Carlos Ghosn, in November. Mitsubishi Chairman Osamu Masuko has said he would need more time to determine the benefits, if any, for the Japanese automaker of the Renault-Fiat merger.

(Adds details about board vote in second paragraph.)

--With assistance from Ma Jie, Kae Inoue and Reed Stevenson.

To contact the reporters on this story: Tara Patel in Paris at tpatel2@bloomberg.net;Daniele Lepido in Milan at dlepido1@bloomberg.net;Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly

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