After Fiat Flop, Senard Faces Added Pressure to Fix Renault

(Bloomberg) -- When Jean-Dominique Senard took the helm of Renault SA five months ago, his main job was to rebuild trust with Nissan Motor Co. following the arrest of Carlos Ghosn, the industry luminary who held together the carmakers’ two-decade alliance.

Instead, Senard pressed Nissan for a merger it didn’t want, then pursued a mega-deal with Fiat Chrysler Automobiles NV without telling the Japanese company. Those talks have now collapsed in acrimony between Fiat and France, Renault’s most powerful shareholder, after Nissan declined to explicitly support the deal.

The turbulence of his brief tenure seems to belie Senard’s profile as the methodical consensus-builder who can steady Renault and its shaky automaking alliance. And, as investors prepare to approve his mandate as chairman at the June 12 annual meeting, some are asking how long the former Michelin CEO will lead the automotive giant.

“Senard is having a hard time fulfilling his mission with Nissan, and now France ran roughshod over him and the Fiat deal,” said Jean-Louis Sempe, an analyst as Invest Securities. “He’s not threatened, but he may decide to throw in the towel as this project is falling apart and relationships with Nissan are difficult.”

Macron Call

Before the Fiat deal collapsed, Senard had assured the government he had Nissan’s support for the combination, said a French official who asked not to be identified. Still, the two Nissan representatives on Renault’s board abstained during an informal vote on the transaction -- as had been predicted in media reports -- prompting France to ask for more time and provoking Fiat’s withdrawal.

After Fiat pulled its offer, speculation spread Thursday that the 66-year-old Senard would depart. Instead, President Emmanuel Macron called him to reiterate his support -- and make sure he would stay, said a person familiar with the matter. On Thursday evening, Finance Minister Bruno Le Maire also expressed his backing for Senard in an interview with daily newspaper Le Figaro.

A person close to Senard who asked not to be identified dismissed the possibility of a resignation, which would put Le Maire in a difficult situation and increase the turmoil at Renault.

A Renault official declined to comment.

Senard stepped into a minefield when he joined France’s biggest carmaker. Renault had been blindsided by Nissan’s allegations of financial misconduct by Ghosn -- which he denies -- and mistrust was high. Senard was parachuted in by the government in January, flanked by Ghosn’s former No. 2, Thierry Bollore, as CEO.

Yet tensions between the companies pre-date Ghosn’s downfall. At the heart of the problem is a lopsided shareholding arrangement: Renault owns 43% of the Japanese carmaker with voting rights, while Nissan has a 15% stake in Renault, stripped of votes. A fear of losing more power led the Japanese carmaker to rebuff a merger approach from Renault in April.

Government Influence

Until last month, Senard was still the head of Michelin, which Macron has called a “model company,” praising it for its dialogue with unions.

Before the Fiat debacle, Senard had made some progress in smoothing out relations with Nissan. He put Bollore on track to join the Japanese company’s board, and created a new governance arrangement with Nissan and Mitsubishi Motors Corp., the smallest member of the alliance.

Senard is likely to head to Japan for Nissan’s shareholder meeting on June 25, when the mandate of CEO Hiroto Saikawa is up for renewal. Renault is expected to back him, based on the terms of their cross-shareholding accord.

Le Maire, in Japan for G-20 meetings this weekend, on Saturday told Agence France-Press that France is willing to consider lowering its 15% stake in Renault to help shore up the alliance with Nissan. While France said this before, it's a gesture that could be seen as fence-mending in light of Renault's failed dalliance with Fiat.

Le Maire may discuss the Renault-Nissan alliance with Japanese Economy Minister Hiroshige Seko during the visit, according to French officials.

A revival of the Fiat-Renault deal can’t be entirely ruled out, as France, Renault and Fiat left the door ajar.

Yet even with the trust of Macron and Renault’s board, Senard will struggle to negotiate with potential partners if France appears to be calling the shots and the partnership with Nissan remains troubled. That leaves him with the difficult tasks of accommodating a Japanese partner craving more autonomy and bulking up to meet the costs of developing electric and autonomous cars, all while pleasing France.

To contact the reporter on this story: Ania Nussbaum in Paris at anussbaum5@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly, Tara Patel

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