In 1993, the chairmen of Volvo and Renault announced the terms under which their two firms would merge. The case describes the unusual structure of the strategic alliance that predated the merger proposal, the motives for merging, and the expected financial synergies. The tasks for the student are to evaluate the proposed terms of the merger and to recommend whether Volvo's shareholders should approve the merger. This case may be taught singly or in combination with the epilogue case, "Volvo/Renault: The Contest for Shareholder Approval" (UVA-F-1089). Student and instructor Excel spreadsheet files are available with this case and teaching note.