Renault and Nissan in talks over shareholding to revive FCA deal

6 August 2019

French carmaker Renault is reported to have held talks with Nissan over a reduction of its stake in its Japanese alliance partner.

The move would allow Renault to reignite merger talks with Fiat Chrysler Automobiles (FCA) after the Italian carmaker backed out of a deal earlier this year. This followed resistance from Nissan and the French Government, which holds a 15% stake in its domestic manufacturer.

The sides are weighing plans, under which Renault would cut its 43.4% holding in Nissan – a move meant to rebalance their global alliance, the Wall Street Journal said, citing internal emails as well as people briefed on the talks. Any reduction of the stake would need approval from France.

Nissan has declined to comment on the reports and representatives for Renault and the French Government have not responded to requests for comment.

Improper balance

The move to redress the authority Renault has over Nissan would also benefit the two companies’ alliance. Since the end of last year, following the arrest of Carlos Ghosn, the carmakers have endured a fractious relationship, with Nissan wanting more say over the running of Renault while also wanting to dilute the influence the French company has over its processes.

Nissan currently holds only a 15% non-voting stake in Renault, and it is believed the reporting of Ghosn over financial irregularities came after the former chairman tried to increase Renault’s influence over the Japanese firm. It remains unclear how fast the talks will advance with differences in how the two companies want to rebalance their capital structure. Nissan is aiming to reduce Renault’s stake to 20-25%, according to people briefed on exchanges, while the French carmaker envisions a holding of 30-35%.

Talks over the size of the shareholding Renault owns began following the collapse of the FCA deal in June, according to the report, and a decision could be made as early as September. This would then pave the way for Renault to approach FCA to discuss a beneficial merger – with Nissan’s blessing.

Merger possible

The Italian carmaker is still keen to complete a deal with the French business, according to its CEO Mike Manley.

Despite significant hurdles to a deal, Manley told the Financial Times that the carmaker was still ′interested in hearing’ from its French rival, adding that a combination offers ′significant synergies.’

′The industrial logic that was present before, it is still present,’ he said. ′Should the circumstances change, then maybe dreams come together and things can happen.’

Speaking about the reports of talks between Renault and Nissan, Manley added: ′As they work through those things, those circumstances that are necessary to move or change potentially could happen. If that were the case, we would be interested in hearing from them.’