By Laurence Frost and Giulio Piovaccari
PARIS/MILAN, June 5 (Reuters) - Fiat Chrysler Automobiles NV FCHA.MI has reached a tentative agreement with France on the terms of its proposed merger with Renault RENA.PA , two sources told Reuters, as the French carmaker's board met to consider the bid late on Wednesday.
The French state, which owns 15% of Renault, had been seeking more influence over the merged company, firmer job guarantees and improved terms for Renault shareholders in return for blessing the $35 billion tie-up. FCA and the French government all declined to comment on the ongoing board discussions.
The new understanding between Paris and FCA, nine days after the Italian-American carmaker pitched its offer, does not mean that Renault board approval is automatic, the two sources close to the talks also cautioned.
Renault directors meeting at the company's Boulogne-Billancourt headquarters outside Paris may decide on Wednesday whether to approve a memorandum of understanding or framework agreement that would begin the long process of a full merger.
FCA has been locked in talks with Renault and the French state over its bid to create the world's third-biggest carmaker. France has broadly welcomed the deal, on condition it guarantees Renault's domestic blue-collar jobs and plants.