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Selling Nissan Shares Could Help Renault Group Finance the Electric Vehicle Transition!
Renault SA is thinking of selling a portion of its Nissan Motor Co. shares, which could provide billions of euros for the company’s transition to electric vehicles while also easing long-standing tensions with its alliance partner.
According to our private sources, Nissan may be prepared to acquire part of Renault’s 1.83 billion shares in the Japanese carmaker. Renault may also look for alternative buyers for a portion of its 43 percent stake in Nissan.
Renault and Nissan’s representatives declined to comment. As of 11:35 a.m. Friday, Renault shares were up as much as 8.3 percent in Paris trade.
Renault would be treading a tight line if it pared a share worth 983.5 billion yen (7.1 billion euros), attempting to equalize a 23-year-old alliance without dissolving it. An unbalanced cross-shareholding arrangement, in which Nissan owns just 15% of Renault and has no voting rights, has long been a source of contention among Nissan officials.
A sale might aid in the funding of important structural changes. In February, Renault CEO Luca de Meo began sketching out his vision. The corporation is considering splitting off its electric vehicle division and listing it separately. The company’s traditional business might then team up with a partner.
According to the sources, one of the choices would be China’s Zhejiang Geely Holding Group Co., which owns Volvo Car AB. Renault and Geely signed a cooperative manufacturing agreement for a South Korean facility earlier this year, and the two have hinted that they may work together in China as well.
Geely’s spokesperson refused to respond.
De Meo, 54, was well on his way to pulling Renault around when Russia invaded Ukraine, effectively forcing the business to quit its second-largest market. The exit will be expensive: the automaker has announced that it will take a non-cash charge of 2.2 billion euros ($2.4 billion) to cover the value of its assets in Russia, which include a production unit in Moscow. It’s also weighing alternatives for its share in Lada producer AvtoVaz, with the possibility of selling it to a local investor.
According to the sources, the negotiations to reorganize the Renault-Nissan alliance, which haven’t been publicly addressed, might take months.
According to the sources, Renault’s EV carve-out might include Nissan assets. According to them, Nissan would also be a partner in the French carmaker’s heritage hybrid and combustion-engine businesses.
Renault’s structural transformation is being coordinated by the two firms, according to Chief Financial Officer Thierry Pieton.
If Renault chooses to sell, Nissan will be in a stronger position to buy back its shares than it was a year ago. The corporation, situated in Yokohama, Japan, has 2 trillion yen ($15.6 billion) in cash and equivalents on hand, and its fiscal year operating profit is expected to be positive for the first time since 2019.
Nissan’s chief operating officer, Ashwani Gupta, will fly to Paris next week to meet with Renault CEO de Meo ahead of a larger meeting between Nissan and Renault executives in Tokyo next month.
Following the arrest of former Chairman Carlos Ghosn in Japan in 2018, tensions about the unequal nature of the firms’ connections nearly ruined the alliance. Since then, the manufacturers have been concentrating on different turnaround programs to help them recover from the harm caused by Ghosn’s departure and the epidemic.
In 2019, talks to rebalance the Franco-Japanese alliance, which includes Mitsubishi Motors Corp., were held, but they were overshadowed by more pressing operational and managerial difficulties. Until now, they’ve been kept off the table.
At present pricing, reducing Renault’s holding to 15%, the same level as Nissan’s ownership of Renault, could return around 4.65 billion euros. The Paris suburb-based carmaker is unlikely to sell the full share, as this would jeopardize the partnership.
With a change in ownership, the partnership’s operational agreement, known as RAMA, may also need to be revised, according to some of the people. The agreement has been a cause of contention between the partners for a long time, as has the French government’s 15% stake in Renault, which comes with double voting rights.
In January, the alliance announced its ambitions to enhance operational links and invest in electrification, which might make any split between Renault and Nissan’s electric vehicle companies more difficult. The firms’ stronger ties would thereafter be “absolutely impenetrable,” according to Renault Chairman Jean-Dominique Senard.