Directors of the French automaker “decided to continue to study with interest the opportunity of such a combination and to extend the discussions,” Renault’s board said Tuesday in a statement. Another meeting is scheduled for late Wednesday, it said.

The board is examining in detail a preliminary agreement on a merger hammered out over past days, according to a person familiar with the matter. The draft takes into account requests by the French state—Renault’s most powerful shareholder— for guarantees on governance and jobs, said the person, who asked not to be identified discussing private deliberations.

Also being considered is a possible payout to Renault investors, potentially by reducing a planned 2.5 billion-euro ($2.8 billion) special dividend slated for Fiat owners, people familiar with the matter said. It’s possible that a decision to move forward will be reached Wednesday, according to the people, creating the world’s third-largest car maker.

Fiat Chrysler’s proposal last week for a 50-50 combination under a Dutch holding company is designed to help the carmakers add scale, share costs, and boost resources for tackling an expensive shift to electrification and autonomous driving.

Longtime Renault partner Nissan has withheld support, and while the Japanese company can’t block the deal, its two representatives on the French company’s board can cast votes. While they are likely to abstain, according to people familiar with the matter, their opposition would be a symbolic blow to the Fiat proposal. Nissan opposition would also go against a French government demand that any Renault combination with Fiat remain within the framework of the existing Franco-Japanese alliance.

Nissan Stance

The Japanese company’s CEO, Hiroto Saikawa, muddied the waters Monday by saying the company needs to review the future of its two-decade alliance with Renault, including contractual relationships, in light of the proposed Fiat deal. While the Yokohama-based company can’t block a Fiat-Renault combination, it could use a strong presence in China, Japan, and the rest of Asia, as well as an electric-car technology, as leverage.

French Finance Minister Bruno Le Maire has demanded guarantees on French jobs, industrial sites, board room representation and participation in a European electric vehicle battery project, in addition to keeping intact the existing alliance that also includes Mitsubishi Motors.

Under terms of the original proposal, Renault shareholders would get an implied premium of about 10%, while Fiat owners would get dividends to account for its higher equity value. Shares of both companies rose Tuesday in Paris in anticipation an agreement was near. Together, the two firms have a combined market value of about 35 billion euros ($39 billion).

Dividend Demand

Some investors have voiced doubts about the deal. Paris-based activist investment manager CIAM, in a letter to Renault’s board, said the merger with Fiat significantly undervalues Renault and that a special dividend should go to the French company, not Fiat Chrysler shareholders.

The French carmaker’s industrial assets have a negative implied value of 3 billion euros under the terms of the proposed deal, according to the Renault shareholder. Based on earnings before interest and taxes, they should be valued at 6.75 billion euros, CIAM said.

“We will strongly oppose this opportunistic takeover that not only undervalues Renault, but also offers no control premium if the price remains as planned,” CIAM President Catherine Berjal wrote.

The relationship between Renault and Nissan has been strained by the fallout from the Tokyo arrest of their former chairman, Carlos Ghosn, in November on allegations of financial crimes. He had denied all charges.

Separately on Tuesday, Renault’s board reviewed final findings of a joint audit with Nissan on spending at their Dutch venture RNBV and confirmed “deficiencies” on expenses and transparency, according to a statement.

The audit flagged concerns about 11 million euros of spending including for Ghosn’s air travel and other items, as well as gifts to non-profit organizations, the statement said.

Renault will join with Nissan’s RNBV directors to review possible legal action in the Netherlands against Ghosn related to air travel and other expenses, as well as the potential possible recovery of gifts made to some non-profit organizations, the company said.

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