Renault Set to Renew Nissan Merger Push Under Holding Company
Each company would own 50% stake, have equal board standing.
(Bloomberg) -- Barely three months into his tenure, Renault SA Chairman Jean-Dominique Senard plans to propose merging the French carmaker with alliance partner Nissan Motor Co. under a holding-company framework, according to people familiar with the matter.
Each company would own about a 50 percent 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 Chief Financial Officer 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 Chief Executive Officer Hiroto Saikawa rejected a request earlier this month 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.
Roughly equal ownership would potentially address concerns raised by Nissan, which resisted an effort by former Chairman Carlos Ghosn to permanently unite the two carmakers. Renault owns 43 percent of Nissan, while the Japanese carmaker owns only 15 percent of its partner of two decades, and has no voting power.
Saikawa was opposed to Senard’s overture earlier this month, 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. Automakers 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 U.S. and China. Mitsubishi Motors Corp. is the third partner in the alliance that was dominated by Ghosn over two decades. The 65-year-old former car titan was released from jail a second time this week in Japan, where he faces charges of funneling 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 will block Saikawa’s reappointment as Nissan CEO if he doesn’t go along with plans to merge the two companies. The Financial Times reported separately that the Nissan CEO had refused a meeting with a 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.
“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, et cetera,” said Renault’s Delbos. “That has not changed.”
--With assistance from Reed Stevenson, Angelina Rascouet and Frank Connelly.
To contact the reporters on this story: Geraldine Amiel in Paris at gamiel@bloomberg.net;Aaron Kirchfeld in London at akirchfeld@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John Bowker
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