An electric cable charges a Renault SA Kangoo ZE Business Maxi automobile on day two of the 88th Geneva International Motor Show in Geneva, Switzerland. (Photographer: Stefan Wermuth/Bloomberg)  

Renault-Nissan Alliance Denies Talks to Buy Out French State

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(Bloomberg) -- The Renault SA and Nissan Motor Co. alliance denied a report that the companies are in talks to buy the French state out of its holding in the nation’s automaker in a step toward a possible merger.

“Any discussion about a share transaction involving Renault, Nissan or the French state is pure speculation,” Jonathan Adashek, a spokesman for the alliance, said in an email. Renault pared gains after spiking as much 13 percent following a Reuters report -- also denied by a French finance ministry official -- of talks with Nissan and government officials about the Japanese automaker purchasing most of the French state’s 15 percent stake.

Carlos Ghosn, the chairman of the alliance between Renault, Nissan and Mitsubishi Motors Corp., has been relinquishing some day-to-day control over the companies to focus on strengthening their ties so that they’ll be preserved over the long term. While a merger is one option toward that effort, this would require the approval of the French and Japanese governments, he said in an interview last week.

“I don’t select my shareholders,” he said by phone. “I have the shareholders that I have -- they decide to be here or to get out. I think, frankly, trying to convince them to be here, to grow or to diminish, for me, is irrelevant.”

The French government’s stake in Renault isn’t an impediment to a potential merger, Ghosn said. Nissan shares rose as much as 1.6 percent Thursday in Tokyo.

Succession Moves

Ghosn, 63, gave up the CEO role at Nissan last year. Renault last month named Frenchman Thierry Bollore chief operating officer, positioning the 54-year-old as Ghosn’s second-in-command and likely successor.

After engineering turnarounds at both Renault and Nissan, Ghosn has overseen a rebound at Mitsubishi Motors from a Japan fuel-economy testing scandal that threatened its viability. He orchestrated Nissan’s purchase of a controlling stake in Mitsubishi Motors and has been working on more closely integrating the company with the alliance.

“The Alliance is exploring deeper synergies and increased operating convergence, but has no plans to change the cross-shareholding ratio of its member companies,” Adashek said.

Failed Mergers

A merger of alliance partners may not be necessary, said Maryann Keller, an independent auto analyst in Stamford, Connecticut. The auto industry has a history of failed attempts to combine companies.

“You can collaborate without ownership,” Keller said. “It’s probably the best way.”

The French government doesn’t want to relinquish its equity ownership because it gives them leverage to maintain Renault jobs, said Richard Hilgert, a Morningstar analyst in Chicago.

“Ghosn is absolutely on track to create stronger and more integrated purchasing, manufacturing and engineering synergies,” he said. “I haven’t seen anything to indicate we’ll see a higher ownership stake in Renault by Nissan.”

©2018 Bloomberg L.P.

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