Nissan, Renault hold merger talks after two-decade union
DEAL WOULD END ALLIANCE BETWEEN THE FIRMS AND MARRY THEM AS ONE CORPORATION
Renault SA and Nissan Motor Co are in talks to merge, seeking to solidify their two-decadeold alliance under a single stock as an unprecedented shift toward electric and shared cars transforms the industry, people with knowledge of the matter said.
A deal would end the current alliance between the companies and marry them as one corporation, said the people, who asked not to be identified as the details aren’t public. Renault currently owns 43 per cent of Nissan while the Japanese carmaker has a 15 per cent stake in its French counterpart. Carlos Ghosn, the chairman of both companies, is driving the negotiations and would run the combined entity, the people said.
A merged giant would be a more formidable rival for Volkswagen AG and Toyota Motor Corp, allowing the partners to better pool resources as the industry shifts toward new-energy vehicles, autonomous driving and car-sharing services. While the alliance of Renault and Nissan has brought savings, the fragmented ownership structure has prevented the companies from reaping full benefits from their union.
“Size matters in the auto industry,” said Janet Lewis, an analyst at Macquarie in Tokyo. “The concern has always primarily been the French government, and somewhat Japan, because both France and Japan like to keep their national champions.”
Shareholders
The parties are discussing a transaction in which Nissan would essentially give Renault shareholders stock in the new company, the people said. Nissan shareholders would also receive shares in the new company in exchange for their holdings, they said. The automaker may maintain headquarters in both Japan and France.
Renault shares jumped as much as 8.3 per cent, hitting the highest intraday level in more than a decade. They were up 4.5 per cent at 11:25am in Paris, giving the company a market value of about €29 billion (Dh131 billion, $36 billion). Nissan shares are down nearly 2 per cent over the past year, giving the company a valuation of 4.6 trillion yen ($43 billion).
Getting a deal done could prove very difficult, the people said. The French government owns 15 per cent of Renault and may be reluctant to relinquish control over its stake or have its position watered down. Both the French and Japanese governments would also have to approve a deal and may have strong opinions on where the combined company is domiciled, the people said.
One possibility would be to base the company in London or the Netherlands, where cross-Atlantic carmaker Fiat Chrysler Automobiles NV has its corporate charter. Fiat Chrysler maintains headquarters in both Italy and the US. No final decisions have been made and the talks, which have been ongoing for several months, may not result in a deal, they said.
A spokesman for the Renau-ltNissan alliance said the group doesn’t comment on rumours and speculation, while a spokesman for the French finance ministry declined to comment.