Renault suggests joint board structure with Nissan

29 April 2019

Renault is to propose a joint holding company with Nissan that will give both carmakers equal footing in their Alliance partnership.

Under the proposal, both companies would nominate an almost equal number of directors to the new company, in which ordinary shares in both Nissan and Renault would be transferred on a balanced basis, reports Japan’s Nikkei newspaper.

This move would dilute the stake held in Renault by the French Government, reducing it down to around 7-8% from the current 15%. The new company would also be headquartered in a third country, such as Singapore, to remain neutral between the two company’s nationalities.

Renault plans to propose Nissan soon, the Nikkei said, having modified an earlier merger idea that Nissan rejected on 12 April. The Japanese carmaker has declined to comment on the reports.

CEO block

Separately, Yomiuri reported that Renault would block Saikawa’s reappointment as Nissan CEO if he doesn’t go along with plans to merge the two companies. The Financial Times said separately that the Nissan CEO had refused a meeting with an SMBC Nikko banker hired by Renault.

This was followed by a call from a Japanese trade ministry official who told the banker a merger would not work, the newspaper said.

France’s Les Echos said the bankers there came up with a holding-company proposal that Renault and France generally found acceptable, but Nissan and Japan’s trade ministry did not. SMBC Nikko is now working on a fresh proposal that would better include Mitsubishi, the newspaper said.

Ghosn unease

The suggestion comes as Renault tries to rebuild bridges with Nissan following the arrest of former Alliance CEO, Carlos Ghosn, over financial misconduct at the Japanese company. It is widely believed that the carmaker’s chairman was implicated of wrongdoing as he tried to organise a merger between the two businesses.

Rather than a takeover, Nissan has constantly argued for equal footing in the alliance with its French partner. Renault holds a 43% stake in Nissan, while the Japanese company has just a 15% stake in the French firm.

Struggles continue

Nissan recently slashed its profit forecast for the year just ended to its lowest in nearly a decade, citing weakness in its US operations. Sales in Europe are also declining by large margins, according to the latest ACEA figures.

It is unclear whether Renault would hold the casting vote in major decisions at the newly proposed company – as it did in Renault-Nissan B.V., a strategic management company jointly held by both companies, which oversaw operations for the partnership.

That company was closed last month after an internal investigation by Nissan following Ghosn’s arrest indicated that the company may have been involved with financial misconduct by the former chairman.