Renault said to be seeking a merger with Nissan
Nissan CEO Hiroto Saikawa rejected a request earlier in April by Renault chair Jean-Dominique Senard to reconsider a merger, people familiar with the matter have said
Paris/London — Barely three months into his tenure, Renault chair Jean-Dominique Senard plans to propose merging the French car maker with alliance partner Nissan under a holding-company framework, according to people familiar with the matter.
Each company would own about a 50% stake in the holding company and have equal board representation, one of the people said, asking not to be named discussing confidential deliberations. The entity would be headquartered outside France or Japan, possibly in Singapore, the person said.
“What we always said, and we still say the exact same thing, is that what we want is the alliance to be irreversible,” Renault CFO Clotilde Delbos said Friday on the company’s first quarter conference call when asked about its plans. “This is what we are pursuing collectively with Nissan.”
Nissan CEO Hiroto Saikawa rejected a request earlier in April by Senard to reconsider a merger, people familiar with the matter have said. Representatives for Nissan and Renault declined to comment on the holding-company proposal. Nikkei reported on the plans earlier Friday.
The aim of the structure is to cement the alliance and secure cost savings amid a sector downturn, the person said. The proposal is one of several being discussed, and Renault is seeking a plan that Nissan would support, the person said.
Renault shares advanced as much as 4.3% on Friday, and had risen 2.7% to €61.18 as of 4.55pm in Paris. That would give the French car maker a market value of €18.1bn, compared with Nissan’s ¥3.77-trillion ($33.8bn).
Roughly equal ownership would potentially address concerns raised by Nissan, which resisted an effort by former chair Carlos Ghosn to permanently unite the two car makers. Renault owns 43% of Nissan, while the Japanese car maker owns only 15% of its partner of two decades, and has no voting power.
Saikawa was opposed when Senard made an overture earlier in April, saying the priority should be rebuilding Nissan, people familiar with the matter told Bloomberg News this week.
Both companies are struggling. Nissan this week said it will miss its annual profit goal, and Renault on Friday reported a drop in first-quarter sales. Car makers have been contending with a decline in China, the world’s biggest market, and a broader slowdown elsewhere, while a shift toward electrification is placing huge demands on investment capital.
Renault’s operations are focused mostly in Europe, while Nissan is bigger in the US and China. Mitsubishi is the third partner in the alliance that was dominated by Ghosn over two decades. The former car titan was released from jail a second time this week in Japan, where he faces charges of funnelling millions of dollars from Nissan through an intermediary for his own purposes.
Ghosn has denied the allegations, and accused unnamed Nissan executives of plotting against him to thwart plans to merge Nissan with Renault, whose most powerful shareholder is the French government.
Separately on Friday, Yomiuri reported that Renault would block Saikawa’s reappointment as Nissan CEO if he did not 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. That was followed by a call from a Japanese trade ministry official who told the banker a merger wouldn’t work, the newspaper said.
France’s Les Echos said the bankers there came up with a holding-company proposal that Renault and France found generally acceptable, but Nissan and Japan’s trade ministry did not. SMBC Nikko is now working on a new proposal that would better include Mitsubishi, the newspaper said.
“We need the alliance, and we need it because it provides us with a huge strength in a period where the automotive industry is really in turbulence, whether from the market, the technology change, etc,” said Renault’s Delbos. “That has not changed.”
With Reed Stevenson, Angelina Rascouet and Frank Connelly.