Renault will lower its stake in Nissan to retain a 15% cross-shareholding, with the remainder of its holding to be transferred into a French trust for a coordinated sale over time, the companies said. — Reuters
PARIS: Renault SA agreed to lower its stake in Nissan Motor Co, moving to finalise protracted negotiations to solve longstanding frictions in their two-decade alliance and paving the way to better compete in a rapidly shifting auto industry.
The French carmaker will lower its stake in Nissan to retain a 15% cross-shareholding, with the remainder of its holding to be transferred into a French trust for a coordinated sale over time, the companies said yesterday.
The plan, which still requires final approval from the companies’ respective boards, will allow Renault to push on with the carve-out of its electric-car business, known as Ampere, which the company wants to list in an initial public offering later this year.
The deal follows months of tense negotiations that risked collapsing late last year due to sticking points on intellectual property and disagreement over the valuation of Renault’s electric vehicle business, people familiar with the situation have said.
Dating back to 1999, the alliance was set up when Renault rescued Nissan with a cash injection to form one of the biggest auto partnerships in the industry.
Over the years, rivalries and mutual suspicion mounted, with tensions spilling over into Japanese-French politics when Renault contemplated merging the two companies, culminating in the downfall of former leader Carlos Ghosn.
Renault declined as much as 4.1% in Paris trading, paring some of its recent gains. The manufacturer has been making headway on a turnaround under chief executive officer Luca de Meo, including the fraught exit from Russia, its second-biggest market, following the invasion of Ukraine.
Since March last year, after de Meo first floated plans for a deep overhaul, Renault shares have gained 75%.
“A re-sized capital structure should help keep the alliance viable, maintaining synergies and opening up strategic opportunities,” Jefferies analyst Philippe Houchois said in a note.
“Renault resisted pressure to sell at current levels and is now in position to better allocate excess capital for growth and shareholders.”
Renault, Nissan and junior alliance partner Mitsubishi Motors Corp plan to move forward via collaborations on specific projects, including in India, South America and Europe.
Nissan will also invest in Renault’s carved-out EV and software business Ampere with the goal of becoming a strategic shareholder, according to the statement. Bloomberg News first reported on the pair coming to an agreement in principle on the rebalancing and key projects last week.
According to people familiar with the matter, Nissan may invest between US$500mil (RM2.1bil) and US$750mil (RM3.2bil) for a 15% stake in Ampere.
The agreement with Nissan is critical for de Meo to move forward with his own strategy, which includes a split into five units as well as a separate entity for Renault’s legacy combustion-engine business with a new partner in China’s Zhejiang Geely Holding Co and recycling.
Nissan’s independent directors endorsed proposals from Renault earlier this month, with an event for the official announcement tentatively planned for Feb 6 in London, people familiar with the situation have said.
The two sides have been inching closer to a decision since early last year.
A final agreement will address a power imbalance that’s long bothered executives in Japan.
Although Renault holds the larger stake at 43% with voting rights, Nissan makes more cars while owning a 15% stake in the French carmaker with no voting rights. — Bloomberg
