French-Japanese Talks Signal Progress on Renault-Nissan Spat

(Bloomberg) -- Talks between the economy ministers of Japan and France to strengthen the partnership between Nissan Motor Co. and Renault SA are the latest sign that the two sides are working toward resolving a dispute between the carmakers.

Hiroshige Seko, the economy and trade minister of Japan, and Bruno Le Maire, the French Finance Minister, reaffirmed their support for the alliance in a phone call, the two governments said in a joint statement on Monday.

The carmakers are working on ways to end the discord in their two-decade alliance, people with knowledge of the companies’ plans said. The partnership was destabilized following the arrest of Carlos Ghosn last year and his subsequent ouster from both companies. Although they have tried to mend the relationship, both sides have also sought greater sway. Sorting out those issues would set the stage for a potential revival of Renault’s attempt to merge with Fiat Chrysler Automobiles NV, the people said, asking not to be identified because the matter is private.

Representatives of Nissan, Renault and Fiat Chrysler declined to comment.

Renault shares reversed earlier losses to rise as much as 2.1% after Bloomberg reported on the developments. It was trading up 1.1% as of 12:33 p.m. in Paris, giving the company a market value of 15.5 billion euros ($17 billion). Fiat gained as much as 3.4% in Milan, and was up 1.7% for a market value of 18.8 billion euros.

Failed Deal

The Fiat proposal was called off in June, after Renault failed to win the backing of its Japanese partner and government representatives on the French carmaker’s board refused to sign off on the plan.

Last month, the Wall Street Journal reported that Renault and Nissan were working on a deal to balance out their lopsided relationship. As part of the plan, the French carmaker would reduce its 43% stake in its Japanese partner, according to two people familiar with the matter.

Last week the French government, Renault’s most powerful shareholder, indicated flexibility to tweak the ownership balance. In an interview on French radio, Martin Vial, the head of the state shareholding agency, didn’t reject the idea of possible modifications to the ties between the companies or a potential cut to France’s 15% stake in Renault -- so long as such a move created value for France. He emphasized that cooperation between the companies must come first, however.

That was followed up on Monday, when Le Maire and Seko announced a cooperation agreement for the countries to work together in areas such as autonomous driving, batteries and electric cars. They said they exchanged views and information on the three-way alliance that also includes Mitsubishi Motors Corp.

“The two ministers reaffirmed their strong support for the Nissan-Renault alliance and discussed the two companies’ discussions to strengthen the alliance’s competitiveness,” they said in a joint statement.

Japan’s Ministry of Economy, Trade and Industry isn’t aware of the substance of Renault and Nissan’s discussions, which aren’t related to its announcement, according to Futoshi Kono, director of its automobile division. “The announcement we made was regarding cooperation between the French and Japanese governments,” he said.

France’s economy ministry had no comment beyond the joint statement.

Equal Footing

Nissan has long sought to equalize the cross-shareholdings that favor the French side of the partnership and reduce the influence of the French government on the alliance. Nissan has a 15% stake in Renault with no voting rights.

Their differences have led to huge strains since the November arrest of former Chairman Ghosn, who held the partnership together for almost two decades. He is awaiting trial in Japan on allegations of financial wrongdoing, and has denied misconduct.

The alliance partners together produce some 10.8 million cars a year, almost double Ford Motor Co.’s global deliveries. Were it a single company, the alliance would be second in vehicle sales only to Germany’s Volkswagen AG, with Toyota Motor Corp. a close third.

--With assistance from Daniele Lepido, Ma Jie, Tommaso Ebhardt, Manuel Baigorri, Aaron Kirchfeld, Ania Nussbaum, Gregory Viscusi and Masatsugu Horie.

To contact the reporters on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net;Siddharth Philip in London at sphilip3@bloomberg.net;Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net

To contact the editors responsible for this story: Reed Stevenson at rstevenson15@bloomberg.net;Anthony Palazzo at apalazzo@bloomberg.net

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