Nissan CEO Unaware of Any of Talks of Dealmaking With Renault
Nissan CEO Unaware of Any of Talks of Dealmaking With Renault
(Bloomberg) -- Nissan Motor Co.’s chief executive officer said he was unaware of any discussions about deal-making around the Japanese carmaker’s embattled alliance with Renault SA after a newspaper report projected a renewed effort by its French partner to bring both companies under one roof.
“There is no such talk” between the alliance partners, Nissan Chief Executive Officer Hiroto Saikawa told Bloomberg News, adding he was unaware about such an intention at Renault. A Japanese government official also denied any knowledge of such a plan.
France earlier sought to downplay the possibility of new dealmaking, after the Financial Times on Wednesday reported Renault aims to restart merger talks with Nissan within a year as the first step toward creating a bigger auto conglomerate. After that, both companies could bid for Fiat Chrysler Automobiles NV, the report said.
Spokesmen for Renault and Fiat Chrysler declined to comment on the report.
Saikawa earlier Thursday said he had no knowledge of talks about possible bid for FCA. Japan’s Chief Cabinet Secretary Yoshihide Suga said the government is unaware of the facts related to reports about Renault restarting the merger talks with Nissan. He added that any specific movement toward maintaining or strengthening the alliance should be discussed “in a manner satisfactory” to the related parties. Mitsubishi Motors Corp. CEO Osamu Masuko also said he’s heard ”absolutely nothing.”
The French state is Renault’s most powerful shareholder with extra voting rights and a 15 percent stake. “The absolute priority for the French state is the Renault-Nissan Alliance,” government spokesman Benjamin Griveaux said Wednesday. Decisions made this month about governance should allow it to “get to work.”
Renault and Nissan earlier this month unveiled a new board to govern their alliance, which has been on shaky ground ever since the November arrest of former head Carlos Ghosn, who is awaiting trial for alleged financial wrongdoing. He has denied the charges. Ghosn had planned to make their ties permanent, yet such a move faced resistance from within Nissan due to a power imbalance within the two company’s shareholding structure.
The new alliance board led by Renault chairman Jean-Dominique Senard has improved confidence so that the two sides can push ahead with merger plans, the Financial Times reported, citing unidentified people familiar with both sides’ thinking.
A combination of Renault, Nissan, Fiat and Chrysler would create an automaker that could better compete against global competitors such as Volkswagen AG and Toyota Motor Corp. Ghosn held talks about merging Renault with Fiat Chrysler two to three years ago, but was stopped by the French government, according to the FT report.
Fiat Chrysler is seeking a partnership or merger, and Chairman John Elkann has met with other rivals, including Peugeot-maker PSA Group of France, to gauge the possibility of a deal, the newspaper reported.
Renault, which owns 43 percent of Nissan, has a market capitalization of 17.3 billion euros ($19.5 billion). Nissan, which in turn owns 15 percent of Renault, has a market capitalization of about 3.85 trillion yen ($35 billion), while Fiat Chrysler’s is 20.8 billion euros.
Merger Controversy
The lopsided ties between Renault and Nissan have made an all-out merger between the two controversial. Before his arrest, the French government tasked Ghosn with cementing their alliance. Such a move faced internal opposition at Nissan, including from Saikawa. Instead of a deeper capital tie-up, Nissan has sought to improve the Japanese bargaining position in a partnership it has said has for too long favored the French side.
In the face of strains, the idea of adding Fiat Chrysler to the mix, with its management and production cultures from Italy and the U.S., would be a tall order. Further complicating any talks is the fact that the French government stake potentially would be diluted.
“I think it’d be opportune, but when it comes to feasibility, it’s another story,” said Arnaud Ayme, a consultant for SIA Partners who has worked for a number of carmakers, including Renault, but doesn’t speak for any of them. “It wouldn’t be easy.”
Rocky relations between France and Italy wouldn’t help any combination between the companies, he said.
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In the past, the Renault-Nissan alliance often has been cited as an example of a successful combination that didn’t go as far as a merger, underpinned by cross-shareholdings and cost cutting. Yet the partnership has been challenged by the scandal surrounding Ghosn, with insiders from both sides saying trust between the two teams was severely tested.
The partnership this month agreed to a new governance structure designed to streamline operational decisions, with Senard placed as the chairman. An outside corporate-governance panel also released recommendations for Nissan on Wednesday that include creating a more independent board.
--With assistance from Kae Inoue, Geraldine Amiel, Tommaso Ebhardt, Ruth David, Aaron Kirchfeld, Jim Jia, Gareth Allan and Helene Fouquet.
To contact the reporters on this story: Ma Jie in Tokyo at jma124@bloomberg.net;Ania Nussbaum in Paris at anussbaum5@bloomberg.net;Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Young-Sam Cho at ycho2@bloomberg.net, Tara Patel
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