Renault decided to slash its stake in its partner Nissan from 45% to 15%. This new deal was agreed upon after a broad agreement reshaping relations between the firms. The 15% stake is of the same size as Nissan’s stake in its French counterpart.
It is known that Renault holds the larger stake at 43 percent and has voting rights, while Nissan makes more cars while owning a 15 percent stake in the French carmaker with no voting rights according to a report by Bloomberg. The two partners have agreed that this rebalancing of stakes would address a power imbalance as the Japanese automaker lacks voting rights. The Japanese automaker is also likely to invest in Renault’s electric vehicle business named ‘Ampere’. As of now the size of Nissan’s probable stake in Ampere is unknown.
Nissan and Renault will now have a 15% cross-shareholding that will allow Nissan to exercise its voting rights, which it was unable to do previously. “The ability to exercise voting rights is welcome from a corporate governance perspective and acts as a guardrail to keep interests aligned between the two parties,” said Jon Withaar, head of Asia special situations at Pictet Asset Management.
New structure
The new structure would also see Renault transfer 28.4% of Nissan shares into a French trust. Voting rights in the trust would be ”‘neutralized’ for most of the decisions, but the economic rights (dividends and shares’ sale proceeds) would still entirely benefit Renault until such shares are sold,” according to the Monday announcement. Renault would instruct the trustee to sell those shares if “commercially reasonable” and as part of a “coordinated and orderly process.”
The carmakers first signed their coalition in March 1999, expanding it to include junior partner Mitsubishi Motors in 2016. The Monday deal comes after months of intense discussions over the restructuring of the Franco-Japanese alliance. As part of the agreement, Nissan would also invest in Ampere, Renault’s electric vehicle arm, while the two companies will embark on “high-value-creation operational projects” in Latin America, India, and Europe. Renault announced in November that it had signed a non-binding framework agreement with China’s Geely to establish a new company producing hybrid powertrains and “highly efficient ICE [internal combustion engine] powertrains.”
It appears that the future shape of the Franco-Japanese alliance has implications for both companies as well as the global auto industry. Also, it highlights how the immense technological upheaval in the auto industry is forcing companies to partner with and compete with a dizzying number of newcomers and tech firms.
