Renault set to renew Nissan merger push under holding company

Bloomberg

Barely three months into his tenure, Renault SA Chairman Jean-Dominique Senard plans to propose merging the French car-maker 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 per cent 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.

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.

“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 on Friday on the company’s first quarter conference call when asked about its plans. “This is what we are pursuing collectively with Nissan.”

Nikkei reported on the plans earlier on Friday. Representatives for Nissan and Renault declined to comment on the holding-company proposal.

Roughly equal ownership would potentially address concerns raised by Nissan, which resisted an effort by former Chairman Carlos Ghosn to permanently unite the two car-makers. Renault owns 43 per cent of Nissan, while the Japanese car-maker owns only 15 per cent of its partner of two decades, and has no voting power. However, 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. Saikawa opposed the overture, saying the priority should be rebuilding Nissan, the people said.

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. Auto-makers 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 US and China. Mitsubishi Motors Corp is the third partner in the alliance that was dominated by Ghosn over two decades.

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, etc,” said Renault’s Delbos. That has not changed.

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