Renault could reduce its shareholding in Nissan as part of its plans to split itself into separate electric and internal-combustion engine companies.
Over the weekend Luca de Meo, CEO of the Renault Group, and Francois Provost, Renault’s head of international development and partnerships, reportedly held “marathon discussions” with Makoto Uchida, Nissan’s CEO, and Ashwani Gupta, Nissan’s chief operating officer.
According to the business website, these four men were locked in talks throughout the Japanese F1 Grand Prix in Suzuka on Saturday and Sunday. On Monday they all hopped on flights to Yokohama to continue discussions at Nissan’s headquarters.
While details are still being worked out, the broad outline will reportedly see Renault reduce its shareholding in Nissan from today’s 44 per cent to 15 per cent, in line with Nissan’s stake in Renault.
To maximise its returns, Renault will not sell its stake now as the market is on a downward trend, nor will the sale happen in one tranche. Instead, the shares Renault reportedly intends to sell could be put into trust for a gradual sale at a later date.
Renault is also expected to agree to rules preventing it from selling its shares to a competitor or an activist investor. Nissan may also be given first right of refusal over any shares being sold by Renault.
In addition to this, Renault may also voluntarily cap its voting rights at 15 per cent immediately. In return Nissan could invest in Renault’s soon-to-be established EV division, with the report indicating Nissan might secure up to 15 per cent of the France-based unit.
Sticking points reportedly include Renault’s desire to sell its petrol, diesel and hybrid drivetrain technology to Aurobay, a powertrain joint venture between Volvo and its parent Geely.
Geely and Renault have struck up multiple deals over the past year, which will see the Chinese automaker designing and producing cars for Renault in China, as well as taking a 34 per cent stake in the division formerly known as Renault Samsung Motors.
Neither of the two firms have confirmed the details in the report, but they did put out a joint statement overnight saying they had “trustful discussions” over the weekend.
Nissan and Renault stated their discussions include “strategic common initiatives across markets, products and technologies”, as well as “Nissan’s consideration to invest in the new Renault EV entity”.
Finally, the two firms also said they are looking to “drive structural improvements to ensure sustainable Alliance operations and governance”, perhaps hinting at a change in their shareholdings and how the two automakers interact.
The current Renault-Nissan-Mitsubishi Alliance traces its history back to the late 1990s, when Renault bought roughly 36 per cent of Nissan, a stake that was later upped to 44 per cent.
Nissan at the time was wallowing in red ink in the aftermath of the Japan’s bubble economy, and had a range of vehicles that could broadly be described as a bit bland.
Under the leadership of Renault-appointee Carlos Ghosn, Nissan downsized, cut model lines, established a formal alliance with its controlling stakeholder, and returned to profitability.
In time Ghosn became CEO of both companies, and platform sharing between the two firms gave them the scale to take on the likes of Volkswagen and Toyota.
Many members of Nissan’s upper management reportedly feared Ghosn was planning to move the relationship beyond the existing alliance by instigating a full-blown merger. There was also resentment about Renault’s control over Nissan, especially since the Japanese automaker had now become more profitable and successful than its French counterpart.
Reports suggest Ghosn’s arrest for financial impropriety in 2018 was motivated by a desire by some in the company to stop any potential merger.
After Ghosn’s spectacular arrest, and subsequent Hollywood-worthy escape in an instrument case loaded onto a private jet, the Alliance struggled for direction without its long-time leader, and both Renault and Nissan ousting their post-Ghosn CEOs.